-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MTApqTQBfWtDNsq1NJKF0oquCazy13XEWabJ4nKXS+LhpNxS4N+Dh9BXeGxqHCFr Oxgy44U3gj1cSFdeDO2NSw== /in/edgar/work/20000814/0000092122-00-500025/0000092122-00-500025.txt : 20000921 0000092122-00-500025.hdr.sgml : 20000921 ACCESSION NUMBER: 0000092122-00-500025 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SOUTHERN CO CENTRAL INDEX KEY: 0000092122 STANDARD INDUSTRIAL CLASSIFICATION: [4911 ] IRS NUMBER: 580690070 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-03526 FILM NUMBER: 699416 BUSINESS ADDRESS: STREET 1: 270 PEACHTREE ST CITY: ATLANTA STATE: GA ZIP: 30303 BUSINESS PHONE: 4045065000 MAIL ADDRESS: STREET 1: 270 PEACHTREE STREET CITY: ATLANTA STATE: GA ZIP: 30303 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALABAMA POWER CO CENTRAL INDEX KEY: 0000003153 STANDARD INDUSTRIAL CLASSIFICATION: [4911 ] IRS NUMBER: 630004250 STATE OF INCORPORATION: AL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-03164 FILM NUMBER: 699417 BUSINESS ADDRESS: STREET 1: 600 N 18TH ST STREET 2: P O BOX 2641 CITY: BIRMINGHAM STATE: AL ZIP: 35291 BUSINESS PHONE: 2052571000 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GEORGIA POWER CO CENTRAL INDEX KEY: 0000041091 STANDARD INDUSTRIAL CLASSIFICATION: [4911 ] IRS NUMBER: 580257110 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-06468 FILM NUMBER: 699418 BUSINESS ADDRESS: STREET 1: 241 RALPH MCGILL BOULEVARD CITY: ATLANTA STATE: GA ZIP: 30308 BUSINESS PHONE: 4045066526 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GULF POWER CO CENTRAL INDEX KEY: 0000044545 STANDARD INDUSTRIAL CLASSIFICATION: [4911 ] IRS NUMBER: 590276810 STATE OF INCORPORATION: ME FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-02429 FILM NUMBER: 699419 BUSINESS ADDRESS: STREET 1: ONE ENERGY PLACE CITY: PENSACOLA STATE: FL ZIP: 32520-0102 BUSINESS PHONE: 8504446111 MAIL ADDRESS: STREET 1: ONE ENERGY PLACE CITY: PENSACOLA STATE: FL ZIP: 32520-0102 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MISSISSIPPI POWER CO CENTRAL INDEX KEY: 0000066904 STANDARD INDUSTRIAL CLASSIFICATION: [4911 ] IRS NUMBER: 640205820 STATE OF INCORPORATION: MS FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-11229 FILM NUMBER: 699420 BUSINESS ADDRESS: STREET 1: 2992 W BEACH CITY: GULFPORT STATE: MS ZIP: 39501 BUSINESS PHONE: 2288641211 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SAVANNAH ELECTRIC & POWER CO CENTRAL INDEX KEY: 0000086940 STANDARD INDUSTRIAL CLASSIFICATION: [4911 ] IRS NUMBER: 580418070 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-05072 FILM NUMBER: 699421 BUSINESS ADDRESS: STREET 1: 600 BAY ST EAST CITY: SAVANNAH STATE: GA ZIP: 31401 BUSINESS PHONE: 9122327171 10-Q 1 0001.txt SECOND QUARTER FORM 10-Q 2000 =============================================================================== UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _________________________ FORM 10-Q (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended June 30, 2000 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from _____to_____ Commission Registrant, State of Incorporation, I.R.S. Employer File Number Address and Telephone Number Identification No. 1-3526 The Southern Company 58-0690070 (A Delaware Corporation) 270 Peachtree Street, N.W. Atlanta, Georgia 30303 (404) 506-5000 1-3164 Alabama Power Company 63-0004250 (An Alabama Corporation) 600 North 18th Street Birmingham, Alabama 35291 (205) 257-1000 1-6468 Georgia Power Company 58-0257110 (A Georgia Corporation) 241 Ralph McGill Boulevard, N.E. Atlanta, Georgia 30308 (404) 506-6526 0-2429 Gulf Power Company 59-0276810 (A Maine Corporation) One Energy Place Pensacola, Florida 32520 (850) 444-6111 0-6849 Mississippi Power Company 64-0205820 (A Mississippi Corporation) 2992 West Beach Gulfport, Mississippi 39501 (228) 864-1211 1-5072 Savannah Electric and Power Company 58-0418070 (A Georgia Corporation) 600 East Bay Street Savannah, Georgia 31401 (912) 644-7171 ==================================== ========================================== Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes X No____
Description of Shares Outstanding Registrant Common Stock at July 31, 2000 The Southern Company Par Value $5 Per Share 648,627,046 Alabama Power Company Par Value $40 Per Share 5,608,955 Georgia Power Company No Par Value 7,761,500 Gulf Power Company No Par Value 992,717 Mississippi Power Company Without Par Value 1,121,000 Savannah Electric and Power Company Par Value $5 Per Share 10,844,635
This combined Form 10-Q is separately filed by The Southern Company, Alabama Power Company, Georgia Power Company, Gulf Power Company, Mississippi Power Company and Savannah Electric and Power Company. Information contained herein relating to any individual company is filed by such company on its own behalf. Each company makes no representation as to information relating to the other companies. 2 INDEX TO QUARTERLY REPORT ON FORM 10-Q June 30, 2000
Page Number DEFINITIONS........................................................................................................ 4 PART I - FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition The Southern Company and Subsidiary Companies Condensed Consolidated Statements of Income........................................................ 7 Condensed Consolidated Statements of Cash Flows.................................................... 8 Condensed Consolidated Balance Sheets.............................................................. 9 Condensed Consolidated Statements of Comprehensive Income and Accumulated Other Comprehensive Income.......................................................... 11 Management's Discussion and Analysis of Results of Operations and Financial Condition.............. 12 Alabama Power Company Condensed Statements of Income..................................................................... 19 Condensed Statements of Cash Flows................................................................. 20 Condensed Balance Sheets........................................................................... 21 Management's Discussion and Analysis of Results of Operations and Financial Condition.............. 23 Exhibit 1 - Report of Independent Public Accountants............................................... 27 Georgia Power Company Condensed Statements of Income..................................................................... 29 Condensed Statements of Cash Flows................................................................. 30 Condensed Balance Sheets........................................................................... 31 Management's Discussion and Analysis of Results of Operations and Financial Condition.............. 33 Exhibit 1 - Report of Independent Public Accountants............................................... 37 Gulf Power Company Condensed Statements of Income..................................................................... 39 Condensed Statements of Cash Flows................................................................. 40 Condensed Balance Sheets........................................................................... 41 Management's Discussion and Analysis of Results of Operations and Financial Condition.............. 43 Mississippi Power Company Condensed Statements of Income..................................................................... 48 Condensed Statements of Cash Flows................................................................. 49 Condensed Balance Sheets........................................................................... 50 Management's Discussion and Analysis of Results of Operations and Financial Condition.............. 52 Savannah Electric and Power Company Condensed Statements of Income..................................................................... 57 Condensed Statements of Cash Flows................................................................. 58 Condensed Balance Sheets........................................................................... 59 Management's Discussion and Analysis of Results of Operations and Financial Condition.............. 61 Notes to the Condensed Financial Statements........................................................... 64 Item 3. Quantitative and Qualitative Disclosures about Market Risk............................................ 65 PART II - OTHER INFORMATION Item 1. Legal Proceedings......................................................................................... 71 Item 2. Changes in Securities..................................................................................... Inapplicable Item 3. Defaults Upon Senior Securities........................................................................... Inapplicable Item 4. Submission of Matters to a Vote of Security Holders....................................................... 71 Item 5. Other Information......................................................................................... Inapplicable Item 6. Exhibits and Reports on Form 8-K.......................................................................... 73 Signatures ............................................................................................... 75 3 DEFINITIONS TERM MEANING ALABAMA..................................... Alabama Power Company BEWAG....................................... Berliner Kraft und Licht AG Clean Air Act............................... Clean Air Act Amendments of 1990 ECO Plan.................................... Environmental Compliance Overview Plan Energy Act.................................. Energy Policy Act of 1992 EPA....................................... . U. S. Environmental Protection Agency FASB........................................ Financial Accounting Standards Board FERC........................................ Federal Energy Regulatory Commission Form 10-K................................... Combined Annual Report on Form 10-K of SOUTHERN, ALABAMA, GEORGIA, GULF, MISSISSIPPI and SAVANNAH for the year ended December 31, 1999 GEORGIA..................................... Georgia Power Company GULF........................................ Gulf Power Company integrated Southeast utilities.............. ALABAMA, GEORGIA, GULF, MISSISSIPPI, and SAVANNAH MISSISSIPPI................................. Mississippi Power Company Mobile Energy............................... Mobile Energy Services Company, L.L.C. and Mobile Energy Services Holdings, Inc. PEP......................................... Performance Evaluation Plan PSC......................................... Public Service Commission RTO......................................... Regional Transmission Organization SAVANNAH.................................... Savannah Electric and Power Company SCS......................................... Southern Company Services, Inc. SEC......................................... Securities and Exchange Commission SOUTHERN.................................... The Southern Company Southern Energy............................. Southern Energy, Inc. including SOUTHERN subsidiaries managed or controlled by Southern Energy SOUTHERN system............................. SOUTHERN, integrated Southeast utilities, Southern Energy, and other subsidiaries TVA......................................... Tennessee Valley Authority WPD......................................... Western Power Distribution (United Kingdom) (formerly South Western Electricity plc)
4 CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION This Quarterly Report on Form 10-Q includes forward-looking statements in addition to historical information. The registrants caution that there are various important factors that could cause actual results to differ materially from those indicated in the forward-looking statements; accordingly, there can be no assurance that such indicated results will be realized. These factors include legislative and regulatory initiatives regarding deregulation and restructuring of the electric utility industry; the extent and timing of the entry of additional competition in the markets of SOUTHERN's subsidiaries; potential business strategies, including acquisitions or dispositions of assets or businesses, internal restructuring or other restructuring options, that may be pursued by the registrants; state and federal rate regulation in the United States; changes in or application of environmental and other laws and regulations to which SOUTHERN and its subsidiaries are subject; political, legal and economic conditions and developments in the United States and in foreign countries in which the subsidiaries operate; financial market conditions and the results of financing efforts; changes in commodity prices and interest rates; weather and other natural phenomena; the performance of projects undertaken by the non-traditional business and the success of efforts to invest in and develop new opportunities; and other factors discussed elsewhere herein and in other reports (including Form 10-K) filed from time to time by the registrants with the SEC. 5 THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES 6
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) For the Three Months For the Six Months Ended June 30, Ended June 30, 2000 1999 2000 1999 ---------------------------------- ------------------------------------ (in thousands) (in thousands) Operating Revenues: Retail sales $2,188,285 $1,988,445 $3,970,993 $3,663,228 Sales for resale 229,188 194,643 407,117 360,854 Southern Energy revenues 672,907 503,309 1,193,891 1,024,863 Other revenues 105,269 104,683 196,235 183,700 ----------------- ---------------- ------------------ ---------------- Total operating revenues 3,195,649 2,791,080 5,768,236 5,232,645 ----------------- ---------------- ------------------ ---------------- Operating Expenses: Operation -- Fuel 863,249 656,890 1,511,998 1,169,356 Purchased power 180,438 244,152 284,859 518,578 Other 607,661 518,564 1,050,057 1,005,633 Maintenance 252,622 233,945 493,800 455,231 Depreciation and amortization 394,147 325,163 771,439 640,244 Taxes other than income taxes 157,887 145,060 317,662 291,322 ----------------- ---------------- ------------------ ---------------- Total operating expenses 2,456,004 2,123,774 4,429,815 4,080,364 ----------------- ---------------- ------------------ ---------------- Operating Income 739,645 667,306 1,338,421 1,152,281 Other Income: Interest income 34,800 40,142 62,125 69,628 Equity in earnings of unconsolidated subsidiaries 29,658 48,242 50,815 142,923 Other, net 49,097 10,954 66,356 37,666 ----------------- ---------------- ------------------ ---------------- Earnings Before Interest and Income Taxes 853,200 766,644 1,517,717 1,402,498 ----------------- ---------------- ------------------ ---------------- Interest Charges and Other: Interest on long-term debt 208,568 164,355 408,917 330,708 Interest on notes payable 78,213 44,058 145,317 71,515 Amortization of debt discount, 10,546 9,991 19,123 19,011 premium and expense, net Other interest charges, net 3,388 16,056 6,092 29,253 Minority interests in subsidiaries 12,909 14,841 42,977 36,184 Distributions on capital and preferred 44,265 46,181 88,331 89,948 securities of subsidiaries Preferred dividends of subsidiaries 4,763 4,588 9,458 10,221 ----------------- ---------------- ------------------ ---------------- Total interest charges and other, net 362,652 300,070 720,215 586,840 ----------------- ---------------- ------------------ ---------------- Earnings Before Income Taxes 490,548 466,574 797,502 815,658 Income taxes 148,644 152,589 210,154 277,357 ----------------- ---------------- ------------------ ---------------- Consolidated Net Income $341,904 $313,985 $587,348 $538,301 ================= ================ ================== ================ Common Stock Data: Average number of shares of 648,696 693,465 650,915 695,996 common stock outstanding (in thousands) Basic and diluted earnings $0.52 $0.45 $0.90 $0.77 per share of common stock Cash dividends paid $0.335 $0.335 $0.67 $0.67 per share of common stock The accompanying notes as they relate to SOUTHERN are an integral part of these statements.
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THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) For the Six Months Ended June 30, 2000 1999 ----------------- ----------------- (in thousands) Operating Activities: Consolidated net income $587,348 $538,301 Adjustments to reconcile consolidated net income to net cash provided from operating activities -- Depreciation and amortization 787,877 701,860 Deferred income taxes and investment tax credits 42,057 79,902 Equity in earnings of unconsolidated subsidiaries (50,815) (142,910) Other, net 122,705 53,023 Changes in certain current assets and liabilities excluding effects from acquisitions -- Receivables, net (294,685) (67,533) Fossil fuel stock 12,679 (94,238) Materials and supplies (9,233) (4,456) Accounts payable 31,849 (287,931) Other (85,170) 51,952 ----------------- ----------------- Net cash provided from operating activities 1,144,612 827,970 ----------------- ----------------- Investing Activities: Gross property additions (1,185,144) (1,060,446) Southern Energy business acquisitions, net of cash acquired (60,578) (1,476,990) Other (115,535) (86,289) ----------------- ----------------- Net cash used for investing activities (1,361,257) (2,623,725) ----------------- ----------------- Financing Activities: Increase (decrease) in notes payable, net 847,786 2,117,626 Proceeds -- Other long-term debt 881,605 924,915 Capital and preferred securities - 250,000 Common stock 299 23,748 Retirements/repurchases -- First mortgage bonds (200,000) (524,800) Other long-term debt (137,310) (398,066) Preferred stock (383) (85,732) Common stock repurchased (414,475) (250,921) Payment of common stock dividends (437,846) (467,324) Other (1,524) (216,274) ----------------- ----------------- Net cash provided from financing activities 538,152 1,373,172 ----------------- ----------------- Net Increase (Decrease) in Cash and Cash Equivalents 321,507 (422,583) Cash and Cash Equivalents at Beginning of Year 466,416 871,353 ----------------- ----------------- Cash and Cash Equivalents at End of Year $787,923 $448,770 ================= ================= Supplemental Cash Flow Information: Cash paid during the period for -- Interest (net of amount capitalized) $666,730 $489,072 Income taxes (net of refunds) $133,647 $139,130 Southern Energy business acquisitions -- Fair value of assets acquired $661,061 $1,509,815 Less cash paid for common stock 139,394 1,476,990 ----------------- ----------------- Liabilities assumed $521,667 $ 32,825 ================= ================= The accompanying notes as they relate to SOUTHERN are an integral part of these statements.
8
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED BALANCE SHEETS At June 30, 2000 At December 31, Assets (Unaudited) 1999 ------------------- ------------------- (in thousands) Current Assets: Cash and cash equivalents $ 787,923 $ 466,416 Special deposits 32,146 72,490 Receivables, less accumulated provisions for uncollectible accounts of $59,884 at June 30, 2000 and $65,420 at December 31, 1999 1,801,778 1,645,325 Unrecovered retail fuel clause revenue 305,809 243,791 Fossil fuel stock, at average cost 297,956 310,635 Materials and supplies, at average cost 594,313 585,080 Other 315,196 198,823 ------------------- ------------------- Total current assets 4,135,121 3,522,560 ------------------- ------------------- Property, Plant, and Equipment: In service 37,931,125 36,763,700 Less accumulated provision for depreciation 14,587,394 14,075,044 ------------------- ------------------- 23,343,731 22,688,656 Nuclear fuel, at amortized cost 204,011 226,124 Construction work in progress 1,343,171 1,629,701 ------------------- ------------------- Total property, plant, and equipment 24,890,913 24,544,481 ------------------- ------------------- Other Property and Investments: Equity investments in unconsolidated subsidiaries 1,433,990 1,376,357 Property rights, net of accumulated amortization of $273,903 at June 30, 2000 and $226,866 at December 31, 1999 2,098,641 2,202,206 Goodwill, net of accumulated amortization of $189,700 at June 30, 2000 and $163,560 at December 31, 1999 2,013,715 2,105,859 Other intangibles, net of accumulated amortization of $23,490 at June 30, 2000 and $13,308 at December 31, 1999 498,049 446,927 Nuclear decommissioning trusts 706,105 658,567 Leveraged leases 565,980 556,419 Other 647,916 578,231 ------------------- ------------------- Total other property and investments 7,964,396 7,924,566 ------------------- ------------------- Deferred Charges and Other Assets: Deferred charges related to income taxes 953,733 987,144 Prepaid pension costs 654,103 590,274 Debt expense, being amortized 142,102 145,092 Premium on reacquired debt, being amortized 290,534 217,125 Other 490,588 457,770 ------------------- ------------------- Total deferred charges and other assets 2,531,060 2,397,405 ------------------- ------------------- Total Assets $39,521,490 $38,389,012 =================== =================== The accompanying notes as they relate to SOUTHERN are an integral part of these statements.
9
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED BALANCE SHEETS At June 30, 2000 At December 31, Liabilities and Stockholders' Equity (Unaudited) 1999 ------------------- ------------------- (in thousands) Current Liabilities: Securities due within one year $ 387,814 $ 576,299 Notes payable 4,729,395 3,915,258 Accounts payable 886,439 895,456 Customer deposits 139,234 132,555 Taxes accrued -- Income taxes 325,917 155,326 Other 261,030 263,899 Interest accrued 262,145 281,272 Vacation pay accrued 121,060 120,360 Other 563,826 793,334 ------------------- ------------------- Total current liabilities 7,676,860 7,133,759 ------------------- ------------------- Long-term debt 12,412,755 11,746,596 ------------------- ------------------- Deferred Credits and Other Liabilities: Accumulated deferred income taxes 4,500,791 4,504,896 Deferred credits related to income taxes 602,825 639,921 Accumulated deferred investment tax credits 678,517 693,422 Employee benefits provisions 538,147 513,395 Prepaid capacity revenues 69,312 79,703 Other 682,295 453,034 ------------------- ------------------- Total deferred credits and other liabilities 7,071,887 6,884,371 ------------------- ------------------- Minority interests in subsidiaries 749,084 724,610 ------------------- ------------------- Company or subsidiary obligated mandatorily redeemable capital and preferred securities 2,321,945 2,326,835 ------------------- ------------------- Cumulative preferred stock of subsidiaries 368,126 368,509 ------------------- ------------------- Common Stockholders' Equity: Common stock, par value $5 per share -- Authorized -- 1 billion shares Issued -- June 30, 2000: 700,622,308 shares; -- December 31, 1999: 700,620,486 shares 3,503,112 3,503,102 Paid-in capital 2,480,390 2,480,198 Treasury, at cost -- June 30, 2000: 52,001,091 shares; -- December 31, 1999: 34,824,901 shares (1,333,450) (918,972) Retained earnings 4,381,761 4,232,399 Accumulated other comprehensive income (110,980) (92,395) ------------------- ------------------- Total common stockholders' equity 8,920,833 9,204,332 ------------------- ------------------- Total Liabilities and Stockholders' Equity $39,521,490 $38,389,012 =================== =================== The accompanying notes as they relate to SOUTHERN are an integral part of these statements.
10 THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) For the Six Months Ended June 30, ---------------------------------- 2000 1999 ---------------------------------- (in thousands) Consolidated net income $587,348 $538,301 Other comprehensive income: Foreign currency translation adjustments (28,592) (177,991) Related income tax benefits 10,007 62,297 ---------------- ---------------- CONSOLIDATED COMPREHENSIVE INCOME $568,763 $422,607 ================ ================ THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENTS OF ACCUMULATED OTHER COMPREHENSIVE INCOME At June 30, 2000 At December 31, (Unaudited) 1999 ------------------ ------------------ (in thousands) Balance at beginning of period ($92,395) $15,400 Change in current period (18,585) (107,795) ------------------ ------------------ BALANCE AT END OF PERIOD ($110,980) ($92,395) ================== ================== The accompanying notes as they relate to SOUTHERN are an integral part of these statements. 11 THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION SECOND QUARTER 2000 vs. SECOND QUARTER 1999 AND YEAR-TO-DATE 2000 vs. YEAR-TO-DATE 1999 RESULTS OF OPERATIONS SOUTHERN's traditional business is primarily represented by its five integrated Southeast utilities, which provide electric service in four states. Another significant portion of SOUTHERN's business is represented by Southern Energy, which develops and manages domestic and international electricity and other energy-related businesses for SOUTHERN. Businesses acquired by Southern Energy have been included in the consolidated statements of income since the date of acquisition. Certain changes in operating revenues and expenses from the prior period result from such acquisitions. Reference is made to Note (N) in the "Notes to the Condensed Financial Statements" herein for information relating to the planned initial public offering and subsequent spin-off of Southern Energy. Earnings SOUTHERN's consolidated net income for the second quarter and year-to-date 2000 was $342 million ($0.52 per share) and $587 million ($0.90 per share), respectively, compared to $314 million ($0.45 per share) and $538 million ($0.77 per share) for the corresponding periods of 1999. For the integrated Southeast utilities, earnings were up by $18 million or 6.8% and $26 million or 5.7% for the second quarter and year-to-date 2000, respectively, due primarily to higher operating revenues. Earnings for Southern Energy were up by $16 million or 21.1% and $29 million or 17.8% for the second quarter and year-to-date 2000, respectively, when compared to the same periods of the previous year. The increase in Southern Energy's earnings is mainly due to the growing profitability from its Asian business units, primarily due to the Sual generating units being placed in service during the latter part of 1999.
Significant income statement items appropriate for discussion include the following: Increase (Decrease) --------------------------------------------------------------- Second Quarter Year-To-Date ------------------------------- ------------------------------- (in thousands) % (in thousands) % Operating revenues............................... $404,569 14.5 $535,591 10.2 Fuel expense..................................... 206,359 31.4 342,642 29.3 Purchased power expense.......................... (63,714) (26.1) (233,719) (45.1) Other operation expense.......................... 89,097 17.2 44,424 4.4 Maintenance expense.............................. 18,677 8.0 38,569 8.5 Depreciation and amortization expense............ 68,984 21.2 131,195 20.5 Equity in earnings of unconsolidated subsidiaries.................................. (18,584) (38.5) (92,108) (64.4) Other, net....................................... 38,143 348.2 28,690 76.2 Interest on long-term debt....................... 44,213 26.9 78,209 23.6 Interest on notes payable........................ 34,155 77.5 73,802 103.2 Other interest charges, net...................... (12,668) (78.9) (23,161) (79.2) Income taxes..................................... (3,945) (2.6) (67,203) (24.2)
12 THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Operating revenues. Operating revenues for the integrated Southeast utilities increased $229 million or 10.2% during the second quarter of 2000 and $352 million or 8.5% year-to-date 2000 due primarily to increased customer base, warmer weather and growth in the wholesale energy supply business in the Southeast. Southern Energy's operating revenues increased $170 million or 33.7% and $169 million or 16.5% for the second quarter and year-to-date 2000 reflecting increased energy sales as a result of additional generating units placed into service. Fuel expense. These increases for the current quarter and year-to-date 2000 can be attributed primarily to Southern Energy. Fuel expense for Southern Energy increased $152 million or 225.7% for the second quarter and $235 million or 216.1% year-to-date 2000. The increases are primarily attributed to the increased generation at plants in New York and California, which were acquired during 1999. Fuel expense for the integrated Southeast utilities was up due primarily to increased generation in order to meet energy demands. Purchased power expense. The decreases in purchased power expense for the second quarter and year-to-date 2000 when compared to the same periods in 1999 are primarily attributed to Southern Energy and were partially offset by increases in purchased power expense for the integrated Southeast utilities. Southern Energy's purchased power expense decreased $135 million or 84.9% and $333 million or 86.0%, respectively, for the second quarter and year-to-date 2000 as a result of the sale in 1999 of the former South Western Electricity plc's supply business to London Electricity plc. For the integrated Southeast utilities, purchased power expense increased $71 million or 83.8% for the second quarter of 2000 and $99 million or 75.3% year-to-date 2000 due to higher demand for energy. Other operation expense. During the second quarter and year-to-date 2000, the increases in other operation expense are mainly attributed to Southern Energy. Southern Energy's other operation expense was up by $62 million or 77.6% for the current quarter and $36 million or 22.3% year-to-date 2000 as compared to the corresponding periods in 1999. The increases were primarily due to the acquisitions of generating assets in New York and California and the new Sual plant in the Philippines being placed into service in 1999. For the integrated Southeast utilities, other operation expense increased for the current quarter and year-to-date 2000 due primarily to increased costs related to employee severance costs and customer service expense. Maintenance expense. For the integrated Southeast utilities, maintenance expense was up $7 million or 3.4% and $19 million or 4.8%, respectively, for the second quarter and year-to-date 2000 when compared to the same periods in 1999. These increases are attributed to a major, planned outage on a fossil power generation facility and maintenance on overhead lines. Southern Energy's maintenance expenses increased during second quarter and year-to-date 2000 by $12 million or 46.1% and $19 million or 37.9%, respectively, when compared to the same periods in 1999 due primarily to the acquisitions in 1999 of generating assets in New York and California. Depreciation and amortization expense. For the integrated Southeast utilities, this item increased $41 million or 15.5% in the second quarter of 2000 and $70 million or 13.5% year-to-date 2000 primarily as a result of accelerated amortization and depreciation by GEORGIA in accordance with the three-year rate order approved by the Georgia PSC. See Note (H) in the "Notes to the Condensed Financial Statements" herein for further details regarding the retail rate order. Southern Energy's depreciation and amortization expense was higher for the current quarter by $26 million or 45.3% and $58 million or 51.8% year-to-date 2000 due to the increase in generating assets in Asia and North America. 13 THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Equity in earnings of unconsolidated subsidiaries. The decreases in this item for the second quarter and year-to-date 2000 when compared to the same periods in 1999 are attributed to a number of factors at Southern Energy. The decrease in the second quarter 2000 primarily relates to reduced earnings from the energy trading and marketing joint venture and continued price competition in Germany. The majority of the year-to-date 2000 decrease results from a $54 million settlement recognized during the first quarter of 1999 representing claims against a contractor for the Shajiao C construction project in China. The settlement was partially offset by related expenses included in other income accounts and income taxes. Other, net. For the current quarter and year-to-date 2000, Southern Energy's other, net increased $31 million or 179.4% and $14 million or 24.7%, respectively, when compared to the corresponding periods in 1999. These increases are primarily the result of the settlement of a commercial dispute with an outside advisor and additional lease income. For the integrated Southeast utilities, the increases in other, net for the current quarter and year-to-date 2000 are attributed primarily to ALABAMA's increase in the equity portion of Allowance for Funds Used During Construction as a result of an increase in the capitalization base. Interest on long-term debt. For the second quarter and year-to-date 2000, the increases in interest on long-term debt are primarily attributed to Southern Energy and represent increased amounts outstanding for long-term debt. Interest on notes payable. During the second quarter and year-to-date 2000, when compared to the corresponding periods of 1999, the increases in interest on notes payable are attributed to SOUTHERN's increased use of commercial paper and to Southern Energy's acquisition financing. Other interest charges, net. These decreases for the current quarter and year-to-date 2000 are primarily attributed to an increase in ALABAMA's Allowance for Funds Used During Construction resulting in a larger credit to interest expense than was recorded in the corresponding periods for 1999. Also, there was a decrease in interest charges related to the nuclear decommissioning trust, which was offset by a concurrent reduction of interest income in accordance with FERC requirements. Income taxes. The year-to-date 2000 decrease is primarily due to a tax provision of $28 million in 1999 related to the Shajiao C settlement discussed previously. In addition, in February 2000 an agreement with the United Kingdom Inland Revenue related to prior year tax computations at WPD resulted in a $20 million reduction. Future Earnings Potential The results of operations discussed above are not necessarily indicative of future earnings potential. The level of future earnings depends on numerous factors ranging from weather to energy sales growth to a less regulated, more competitive environment. For additional information relating to Southern Energy and other businesses, see Item 1 - BUSINESS - "Southern Energy" and "Other Business" in the Form 10-K. Also, reference is made to Note (N) in the "Notes to the Condensed Financial Statements" herein for information relating to the planned initial public offering and subsequent spin-off of Southern Energy. 14 THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION With the enactment of the Energy Act and new legislation being discussed at federal and state levels to expand customer choice, SOUTHERN is positioning the business to meet the challenge of increasing competition. For additional information, see Item 1 - BUSINESS - "Competition" and Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Future Earnings Potential" of SOUTHERN in the Form 10-K. Compliance costs related to the Clean Air Act could affect earnings if such costs cannot be offset. For additional information about the Clean Air Act and other environmental issues, see Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Environmental Matters" of SOUTHERN in the Form 10-K. On December 20, 1999, the FERC issued its final rule on RTOs. Reference is made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Future Earnings Potential" of SOUTHERN in the Form 10-K for information on this matter. Reference is also made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Environmental Protection Agency Litigation" and Note 3 to the financial statements of SOUTHERN in the Form 10-K for information on EPA litigation. The FASB issued Statement No. 133, Accounting for Derivative Instruments and Hedging Activities, which must be adopted by January 2001. In June 2000, the FASB issued Statement No. 138, an amendment of FASB Statement No. 133, Accounting for Certain Derivative Instruments and Certain Hedging Activities. These statements establish accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. SOUTHERN has not yet quantified the impact of adopting these statements on its financial statements; however, the adoption could increase volatility in earnings and other comprehensive income. In June 2000, SOUTHERN, through its subsidiary Southern Energy, announced an agreement with Potomac Electric Power Company ("PEPCO") to purchase PEPCO's generating business in Maryland and Virginia, assume PEPCO's entitlements under various power purchase agreements, operate two power stations in Washington, D.C. retained by PEPCO, and supply PEPCO with power required to meet its retail obligations for up to four years pursuant to transition power agreements. The purchase price of this transaction is $2.65 billion plus amounts to be determined for working capital and reimbursement of capital expenditures, and approximately $260 million in the event certain power purchase agreements are not transferred to Southern Energy. This transaction is expected to close in November 2000. On Friday, August 11, 2000, WPD Limited ("WPDL"), an indirect 49% owned subsidiary of Southern Energy, submitted an offer of 365 pence per share for the entire ordinary share capital of Hyder plc which owns and runs the electricity network in South Wales and the water distribution and waste water treatment business for all of Wales. This represents a total purchase price of (pound)559 million ($838 million). Friday was the last day for submission of revised offers, no other revised offers were submitted, and WPDL was informed by the Takeover Panel in the United Kingdom that it was the higher bidder. WPDL's increased bid has not yet been formally announced pending the outcome of an appeal by the other party competing to acquire Hyder against a ruling of the Panel Executive allowing the WPDL bid to proceed. If WPDL's bid is successful, it is intended that WPD will become involved in the management of the electricity network in South Wales. Reference is made to Notes (B) through (D), (F) through (I), (L) and (N) through (R) in the "Notes to the Condensed Financial Statements" herein for discussion of various contingencies and other matters which may affect future earnings potential. Reference is also made to Part II - Item 1 - "Legal Proceedings" herein. 15 THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION FINANCIAL CONDITION Overview Major changes in SOUTHERN's financial condition during the first six months of 2000 included $1.2 billion used for gross property additions to utility plant. The funds for these additions and other capital requirements were from operations, short-term borrowings and other long-term debt. See SOUTHERN's Condensed Consolidated Statements of Cash Flows for further details. Reference is made to the SOUTHERN's Condensed Consolidated Statements of Comprehensive Income herein for information relating to other comprehensive income. Financing Activities During the first six months of 2000, maturities of the integrated Southeast utilities' first mortgage bonds totaled $200 million. In February 2000, GEORGIA issued $300 million of floating rate senior notes due February 22, 2002. The proceeds of the sale were used to repay a portion of GEORGIA's outstanding short-term indebtedness. In March 2000, MISSISSIPPI issued $100 million of floating rate senior notes due March 28, 2002. The proceeds were used to prepay bank loans of $45 million maturing in November 2001 and $5 million maturing in October 2002. The balance was used to repay a portion of MISSISSIPPI's outstanding short-term indebtedness. In May 2000, ALABAMA issued $250 million of 7.85% senior notes due May 15, 2003. The proceeds of the sale were used to repay a portion of ALABAMA's outstanding short-term indebtedness. Reference is made to "Future Earnings Potential" herein for the discussion of the agreement between SOUTHERN, through its subsidiary Southern Energy, and PEPCO. To fund the purchase price of this transaction, Southern Energy plans to enter into lease financing arrangements for a significant portion of the PEPCO assets which are expected to provide $1.5 billion; to issue $1.02 billion of debt at Southern Energy North America Generating, Inc., a Southern Energy subsidiary, of which approximately $938 million will be drawn at closing; and to provide the balance from committed credit lines. Reference is made to Note (M) in the "Notes to the Condensed Financial Statements" herein for discussion of a program to repurchase SOUTHERN's common stock. The market price of SOUTHERN's common stock at June 30, 2000 was $23.3125 per share and the book value was $13.75 per share, representing a market-to-book ratio of 170%, compared to $23.50, $13.82 and 170%, respectively, at the end of 1999. The dividend for the second quarter of 2000 was $0.335 per share. Capital Requirements Reference is made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Capital Requirements for Construction", "Other Capital Requirements" and "Environmental Matters" of SOUTHERN in the Form 10-K for a description of the SOUTHERN system's capital requirements for its construction program, sinking fund requirements and maturing debt, and environmental compliance efforts. Approximately $388 million will be required by June 30, 2001 for redemptions and maturities of long-term debt. Also, the integrated Southeast utilities plan to continue, to the extent possible, a program to retire higher-cost debt and preferred stock and replace these securities with lower-cost capital. 16 THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Sources of Capital In addition to the financing activities previously described, SOUTHERN may require additional equity capital during the remainder of the year. The amounts and timing of additional equity capital to be raised in 2000, as well as in subsequent years, will be contingent on SOUTHERN's investment opportunities. The integrated Southeast utilities plan to obtain the funds required for construction and other purposes from sources similar to those used in the past. The amount, type and timing of any financings--if needed--will depend upon maintenance of adequate earnings, regulatory approval, prevailing market conditions and other factors. See Item 1 - BUSINESS - "Financing Programs" in the Form 10-K for additional information. To meet short-term cash needs and contingencies, the SOUTHERN system had at June 30, 2000, approximately $788 million of cash and cash equivalents and approximately $6.2 billion of unused credit arrangements with banks. These unused credit arrangements also provide liquidity support to variable rate pollution control bonds and commercial paper programs. At June 30, 2000, the SOUTHERN system companies had outstanding approximately $2.4 billion of short-term notes payable and $2.3 billion of commercial paper. Management believes that the need for working capital can be adequately met by utilizing lines of credit without maintaining large cash balances. See Note (D) in the "Notes to the Condensed Financial Statements" herein for discussion of financial derivative contracts entered into by SOUTHERN. 17 ALABAMA POWER COMPANY 18
ALABAMA POWER COMPANY CONDENSED STATEMENTS OF INCOME (UNAUDITED) For the Three Months For the Six Months Ended June 30, Ended June 30, 2000 1999 2000 1999 ---------------- ---------------- ---------------- ---------------- (in thousands) (in thousands) Operating Revenues: Retail sales $747,570 $690,043 $1,353,696 $1,257,943 Sales for resale -- Non-affiliates 113,685 93,008 209,816 178,573 Affiliates 18,423 22,183 47,092 69,284 Other revenues 20,780 17,382 36,031 31,140 ---------------- ---------------- ---------------- ---------------- Total operating revenues 900,458 822,616 1,646,635 1,536,940 ---------------- ---------------- ---------------- ---------------- Operating Expenses: Operation -- Fuel 218,321 211,820 413,395 399,834 Purchased power -- Non-affiliates 37,001 17,995 55,873 25,575 Affiliates 53,922 36,091 80,787 63,518 Other 135,363 134,602 247,609 252,498 Maintenance 83,762 75,039 160,596 145,813 Depreciation and amortization 91,226 87,634 181,698 174,816 Taxes other than income taxes 52,088 50,601 106,240 103,662 ---------------- ---------------- ---------------- ---------------- Total operating expenses 671,683 613,782 1,246,198 1,165,716 ---------------- ---------------- ---------------- ---------------- Operating Income 228,775 208,834 400,437 371,224 Other Income (Expense): Interest income 8,551 14,322 14,477 23,768 Equity in earnings of unconsolidated subsidiaries 638 709 1,497 1,477 Other, net (107) (2,796) (1,189) (8,299) ---------------- ---------------- ---------------- ---------------- Earnings Before Interest and Income Taxes 237,857 221,069 415,222 388,170 ---------------- ---------------- ---------------- ---------------- Interest Charges and Other: Interest on long-term debt 54,462 45,966 106,514 91,026 Interest on notes payable 4,234 2,885 7,176 5,560 Amortization of debt discount, premium and expense, net 2,886 2,772 5,725 5,490 Other interest charges, net 2,415 10,787 3,490 16,878 Distributions on preferred securities of subsidiary 6,371 6,202 12,707 12,033 ---------------- ---------------- ---------------- ---------------- Total interest charges and other, net 70,368 68,612 135,612 130,987 ---------------- ---------------- ---------------- ---------------- Earnings Before Income Taxes 167,489 152,457 279,610 257,183 Income taxes 60,278 55,568 100,919 93,344 ---------------- ---------------- ---------------- ---------------- Net Income 107,211 96,889 178,691 163,839 Dividends on Preferred Stock 4,036 3,852 8,004 7,727 ---------------- ---------------- ---------------- ---------------- Net Income After Dividends on Preferred Stock $103,175 $93,037 $170,687 $156,112 ================ ================ ================ ================ The accompanying notes as they relate to ALABAMA are an integral part of these condensed statements.
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ALABAMA POWER COMPANY CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) For the Six Months Ended June 30, 2000 1999 ----------------- ----------------- (in thousands) Operating Activities: Net income $178,691 $163,839 Adjustments to reconcile net income to net cash provided from operating activities -- Depreciation and amortization 202,909 204,381 Deferred income taxes and investment tax credits, net 14,557 15,517 Other, net (37,992) 38,566 Changes in certain current assets and liabilities -- Receivables, net (66,654) (20,610) Fossil fuel stock (10,377) (32,054) Materials and supplies (5,790) (5,805) Accounts payable (6,326) (71,378) Energy cost recovery, retail (7,502) 4,653 Other 24,476 (8,442) ----------------- ----------------- Net cash provided from operating activities 285,992 288,667 ----------------- ----------------- Investing Activities: Gross property additions (391,398) (321,236) Other (26,371) (46,039) ----------------- ----------------- Net cash used for investing activities (417,769) (367,275) ----------------- ----------------- Financing Activities: Increase in notes payable, net 123,418 276,751 Proceeds -- Other long-term debt 250,000 301,650 Preferred securities - 50,000 Capital contributions from parent company 84,000 - Redemptions -- First mortgage bonds (100,000) (300,000) Other long-term debt (3,078) (1,640) Preferred stock - (50,000) Special deposits - (101,650) Payment of preferred stock dividends (7,984) (7,997) Payment of common stock dividends (208,800) (196,400) Other (894) (10,653) ----------------- ----------------- Net cash provided from (used for) financing activities 136,662 (39,939) ----------------- ----------------- Net Change in Cash and Cash Equivalents 4,885 (118,547) Cash and Cash Equivalents at Beginning of Period 19,475 134,248 ----------------- ----------------- Cash and Cash Equivalents at End of Period $ 24,360 $ 15,701 ================= ================= Supplemental Cash Flow Information: Cash paid during the period for -- Interest (net of amount capitalized) $114,885 $114,401 Income taxes (net of refunds) $42,604 $41,660 The accompanying notes as they relate to ALABAMA are an integral part of these condensed statements.
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ALABAMA POWER COMPANY CONDENSED BALANCE SHEETS At June 30, 2000 At December 31, Assets (Unaudited) 1999 ------------------ -------------------- (in thousands) Current Assets: Cash and cash equivalents $ 24,360 $ 19,475 Receivables -- Customer accounts receivable 315,798 265,900 Unrecovered retail fuel clause revenue 176,129 168,627 Other accounts and notes receivable 43,796 42,137 Affiliated companies 60,355 40,083 Accumulated provision for uncollectible accounts (5,269) (4,117) Refundable income taxes 13,974 17,997 Fossil fuel stock, at average cost 94,959 84,582 Materials and supplies, at average cost 173,427 167,637 Other 73,931 46,011 ------------------ -------------------- Total current assets 971,460 848,332 ------------------ -------------------- Property, Plant, and Equipment: In service 12,247,350 11,783,078 Less accumulated provision for depreciation 5,040,364 4,901,384 ------------------ -------------------- 7,206,986 6,881,694 Nuclear fuel, at amortized cost 89,228 106,836 Construction work in progress 589,435 715,153 ------------------ -------------------- Total property, plant, and equipment 7,885,649 7,703,683 ------------------ -------------------- Other Property and Investments: Equity investments in unconsolidated subsidiaries 36,702 34,891 Nuclear decommissioning trusts 295,205 286,653 Other 11,952 12,156 ------------------ -------------------- Total other property and investments 343,859 333,700 ------------------ -------------------- Deferred Charges and Other Assets: Deferred charges related to income taxes 327,282 330,405 Prepaid pension costs 239,491 213,971 Debt expense, being amortized 9,235 9,563 Premium on reacquired debt, being amortized 79,898 83,895 Department of Energy assessments 27,685 27,685 Other 104,628 97,470 ------------------ -------------------- Total deferred charges and other assets 788,219 762,989 ------------------ -------------------- Total Assets $9,989,187 $9,648,704 ================== ==================== The accompanying notes as they relate to ALABAMA are an integral part of these condensed statements.
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ALABAMA POWER COMPANY CONDENSED BALANCE SHEETS At June 30, 2000 At December 31, Liabilities and Stockholders' Equity (Unaudited) 1999 ------------------ -------------------- (in thousands) Current Liabilities: Securities due within one year $ 854 $ 100,943 Notes payable 220,242 96,824 Accounts payable -- Affiliated 97,448 91,315 Other 121,528 140,842 Customer deposits 34,349 31,704 Taxes accrued -- Income taxes 153,241 100,569 Other 52,644 18,295 Interest accrued 34,857 26,365 Vacation pay accrued 30,112 30,112 Other 51,603 84,267 ------------------ -------------------- Total current liabilities 796,878 721,236 ------------------ -------------------- Long-term debt 3,437,906 3,190,378 ------------------ -------------------- Deferred Credits and Other Liabilities: Accumulated deferred income taxes 1,247,445 1,240,344 Deferred credits related to income taxes 256,496 265,102 Accumulated deferred investment tax credits 254,824 260,367 Employee benefits provisions 84,131 82,298 Prepaid capacity revenues 69,312 79,703 Other 143,074 155,901 ------------------ -------------------- Total deferred credits and other liabilities 2,055,282 2,083,715 ------------------ -------------------- Company obligated mandatorily redeemable preferred securities of subsidiary trusts holding company junior subordinated notes 347,000 347,000 ------------------ -------------------- Cumulative preferred stock 317,512 317,512 ------------------ -------------------- Common Stockholder's Equity: Common stock, par value $40 per share -- Authorized - 6,000,000 shares Outstanding - 5,608,955 shares Par value 224,358 224,358 Paid-in capital 1,622,992 1,538,992 Premium on preferred stock 99 99 Retained earnings 1,187,160 1,225,414 ------------------ -------------------- Total common stockholder's equity 3,034,609 2,988,863 ------------------ -------------------- Total Liabilities and Stockholder's Equity $9,989,187 $9,648,704 ================== ==================== The accompanying notes as they relate to ALABAMA are an integral part of these condensed statements.
22 ALABAMA POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION SECOND QUARTER 2000 vs. SECOND QUARTER 1999 AND YEAR-TO-DATE 2000 vs. YEAR-TO-DATE 1999 RESULTS OF OPERATIONS Earnings ALABAMA's net income after dividends on preferred stock for the second quarter and year-to-date 2000 was $103.2 million and $170.7 million, respectively, compared to $93.0 million and $156.1 million for the corresponding periods of 1999. Earnings for the current quarter and year-to-date 2000 increased $10.1 million or 10.9% and $14.6 million or 9.3%, respectively, due primarily to increases in operating revenues, which were partially offset by higher operating expenses. Significant income statement items appropriate for discussion include the following:
Increase (Decrease) --------------------------------------------------------------- Second Quarter Year-To-Date ------------------------------- ------------------------------- (in thousands) % (in thousands) % Retail sales..................................... $57,527 8.3 $95,753 7.6 Sales for resale - non-affiliates................ 20,677 22.2 31,243 17.5 Sales for resale - affiliates.................... (3,760) (16.9) (22,192) (32.0) Purchased power - non-affiliates................. 19,006 105.6 30,298 118.5 Purchased power - affiliates..................... 17,831 49.4 17,269 27.2 Maintenance expense.............................. 8,723 11.6 14,783 10.1 Interest income.................................. (5,771) (40.3) (9,291) (39.1) Other, net....................................... 2,689 96.2 7,110 85.7 Interest on long-term debt....................... 8,496 18.5 15,488 17.0 Other interest charges, net...................... (8,372) (77.6) (13,388) (79.3)
Retail sales. Retail sales revenues were higher for the second quarter and year-to-date 2000 when compared to the same periods in 1999 due mainly to increases in retail energy sales of 5.1% and 4.2% for the respective periods. Retail energy sales increased due primarily to warmer weather and strong commercial growth. Sales for resale-non-affiliates. These revenues increased in the second quarter and year-to-date 2000 due primarily to increased unit power sales and increased sales for resale within ALABAMA's service area. Revenues from unit power sales for the current quarter and year-to-date 2000 increased as a result of higher energy sales and an adjustment recorded in the second quarter of 1999 lowering the return under formula rate contracts. Territorial sales for resale increased for the current quarter and year-to-date 2000 as a result of warmer weather. Energy is usually sold at variable cost and has no significant impact on earnings. Sales for resale - affiliates and Purchased power - affiliates. Revenues from sales for resale to affiliated companies within the SOUTHERN system, as well as purchases of energy, will vary from period to period depending on demand and the availability and cost of generating resources at each company. These transactions did not have a significant impact on earnings. 23 ALABAMA POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Purchased power - non-affiliates. Increased amounts of purchased power were needed to meet territorial demand for the second quarter and year-to-date 2000 to offset decreased nuclear and hydro power generation related to a refueling and steam generator replacement outage and lower stream flows, respectively. Maintenance expense. These expenditures increased for the current quarter and year-to-date 2000 primarily due to higher costs related to a major, planned outage on a fossil power generation facility and increased maintenance of overhead lines. Interest income. This item was lower for the current quarter and year-to-date 2000 when compared to the same periods in 1999 due primarily to a decrease in recognized gains on investments held by the nuclear decommissioning trust. Interest income related to the nuclear decommissioning trust was offset by a concurrent reduction of other interest charges in accordance with FERC requirements. Other, net. The increase for the second quarter and year-to-date 2000 was primarily due to an increase in the equity portion of Allowance for Funds Used During Construction as a result of an increase in the capitalization base. Interest on long-term debt. Interest on long-term debt increased in the second quarter and year-to-date 2000 primarily due to the issuance of $450 million of senior notes in the last half of 1999 and $250 million in the current quarter. Other interest charges, net. The decreases in other interest charges for the second quarter and year-to-date 2000 when compared to the same periods in 1999 are primarily attributed to an increase in Allowance for Funds Used During Construction resulting in a larger credit to interest expense than was recorded in the corresponding periods for 1999. Also, there was a decrease in interest charges related to the nuclear decommissioning trust, which was offset by a concurrent reduction of interest income in accordance with FERC requirements. Future Earnings Potential The results of operations discussed above are not necessarily indicative of future earnings potential. The level of future earnings depends on numerous factors ranging from weather to energy sales growth to a less regulated, more competitive environment. With the enactment of the Energy Act and new legislation being discussed at federal and state levels to expand customer choice, ALABAMA is positioning the business to meet the challenge of increasing competition. For additional information, see Item 1 - BUSINESS - "Competition" and Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Future Earnings Potential" of ALABAMA in the Form 10-K. Compliance costs related to the Clean Air Act could affect earnings if such costs cannot be offset. For additional information about the Clean Air Act and other environmental issues, see Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Environmental Matters" of ALABAMA in the Form 10-K. On December 20, 1999, the FERC issued its final rule on Regional Transmission Organizations (RTOs). Reference is made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Future Earnings Potential" of ALABAMA in the Form 10-K for information on this matter. 24 ALABAMA POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Reference is made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Environmental Matters" and Note 3 to the financial statements of ALABAMA in the Form 10-K for information on EPA litigation. The FASB issued Statement No. 133, Accounting for Derivative Instruments and Hedging Activities, which must be adopted by January 2001. In June 2000, the FASB issued Statement No. 138, an amendment of FASB Statement No. 133, Accounting for Certain Derivative Instruments and Certain Hedging Activities. These statements establish accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts - and for hedging activities. ALABAMA has not yet quantified the impact of adopting these statements on its financial statements; however, the adoption could increase volatility in earnings. Reference is made to Notes (B), (C), (F), (G) and (O) in the "Notes to the Condensed Financial Statements" herein for discussion of various contingencies and other matters which may affect future earnings potential. FINANCIAL CONDITION Overview Major changes in ALABAMA's financial condition during the first six months of 2000 included the addition of approximately $391.4 million to utility plant. The funds for these additions and other capital requirements were derived primarily from operating activities and capital contributions from SOUTHERN. See ALABAMA's Condensed Statements of Cash Flows for further details. Financing Activities During the first six months of 2000, maturities of first mortgage bonds by ALABAMA totaled $100 million. In May 2000, ALABAMA issued $250 million of 7.85% senior notes due May 15, 2003. The proceeds of the sale were used to repay a portion of ALABAMA's outstanding short-term indebtedness. ALABAMA will continue to retire higher-cost debt and preferred stock and replace these securities with lower-cost capital as market conditions permit. Capital Requirements Reference is made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS of ALABAMA under "Capital Requirements," "Other Capital Requirements" and "Environmental Matters" in the Form 10-K for a description of ALABAMA's capital requirements for its construction program, maturing debt and environmental compliance efforts. Sources of Capital In addition to the financing activities previously described herein, ALABAMA plans to obtain the funds required for construction and other purposes from sources similar to those used in the past. The amount, type and timing of any financings--if needed--will depend upon maintenance of adequate earnings, regulatory approval, prevailing market conditions and other factors. See Item 1 - - BUSINESS - "Financing Programs" in the Form 10-K for additional information. 25 ALABAMA POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION To meet short-term cash needs and contingencies, ALABAMA had at June 30, 2000, approximately $24.4 million of cash and cash equivalents, had unused committed lines of credit of approximately $902 million (including $418 million of such lines under which borrowings may be made only to fund purchase obligations relating to variable rate pollution control bonds) and an extendible commercial note program. ALABAMA has regulatory authority for up to $750 million of short-term borrowings. At June 30, 2000, ALABAMA had outstanding $196 million of commercial paper and $24 million of notes payable to banks. 26 Exhibit 1 ARTHUR ANDERSEN REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS TO ALABAMA POWER COMPANY: We have reviewed the accompanying condensed balance sheet of ALABAMA POWER COMPANY as of June 30, 2000, and the related condensed statements of income for the three-month and six-month periods ended June 30, 2000 and 1999 and cash flows for the six-month periods ended June 30, 2000 and 1999. These financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the United States, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the financial statements referred to above for them to be in conformity with accounting principles generally accepted in the United States. We have previously audited, in accordance with auditing standards generally accepted in the United States, the balance sheet of ALABAMA POWER COMPANY as of December 31, 1999 (not presented herein) and, in our report dated February 16, 2000, we expressed an unqualified opinion on that statement. In our opinion, the information set forth in the accompanying condensed balance sheet as of December 31, 1999 is fairly stated, in all material respects, in relation to the balance sheet from which it has been derived. /s/ Arthur Andersen LLP Birmingham, Alabama August 8, 2000 27 GEORGIA POWER COMPANY 28
GEORGIA POWER COMPANY CONDENSED STATEMENTS OF INCOME (UNAUDITED) For the Three Months For the Six Months Ended June 30, Ended June 30, 2000 1999 2000 1999 ---------------- ---------------- ----------------- ---------------- (in thousands) (in thousands) Operating Revenues: Retail sales $1,095,283 $ 990,335 $2,004,311 $1,852,112 Sales for resale -- Non-affiliates 62,110 53,861 105,799 95,616 Affiliates 31,220 14,482 43,153 22,388 Other revenues 32,064 32,870 59,053 52,362 ---------------- ---------------- ----------------- ---------------- Total operating revenues 1,220,677 1,091,548 2,212,316 2,022,478 ---------------- ---------------- ----------------- ---------------- Operating Expenses: Operation -- Fuel 269,396 237,574 480,303 415,786 Purchased power -- Non-affiliates 85,430 47,752 128,540 79,910 Affiliates 41,728 43,850 89,468 98,771 Other 201,529 184,321 360,512 352,603 Maintenance 88,408 90,937 186,541 182,473 Depreciation and amortization 173,803 139,289 331,570 271,724 Taxes other than income taxes 49,896 49,151 101,509 98,153 ---------------- ---------------- ----------------- ---------------- Total operating expenses 910,190 792,874 1,678,443 1,499,420 ---------------- ---------------- ----------------- ---------------- Operating Income 310,487 298,674 533,873 523,058 Other Income (Expense): Interest income 778 2,115 1,186 2,365 Equity in earnings of unconsolidated subsidiaries 676 731 1,529 1,464 Other, net 1,955 (3,389) (4,270) (10,026) ---------------- ---------------- ----------------- ---------------- Earnings Before Interest and Income Taxes 313,896 298,131 532,318 516,861 ---------------- ---------------- ----------------- ---------------- Interest Charges and Other: Interest on long-term debt 43,402 42,872 82,274 83,983 Interest on notes payable 7,920 5,618 16,075 9,834 Amortization of debt discount, premium and expense, net 4,506 3,900 7,216 7,600 Other interest charges, net (2,694) (402) (5,454) 727 Distributions on preferred securities of subsidiary 14,776 17,026 29,552 31,997 ---------------- ---------------- ----------------- ---------------- Total interest charges and other, net 67,910 69,014 129,663 134,141 ---------------- ---------------- ----------------- ---------------- Earnings Before Income Taxes 245,986 229,117 402,655 382,720 Income taxes 97,284 90,368 160,084 151,189 ---------------- ---------------- ----------------- ---------------- Net Income 148,702 138,749 242,571 231,531 Dividends on Preferred Stock 169 178 339 1,379 ---------------- ---------------- ----------------- ---------------- Net Income After Dividends on Preferred Stock $ 148,533 $ 138,571 $ 242,232 $ 230,152 ================ ================ ================= ================ The accompanying notes as they relate to GEORGIA are an integral part of these condensed statements.
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GEORGIA POWER COMPANY CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) For the Six Months Ended June 30, 2000 1999 --------------- ---------------- (in thousands) Operating Activities: Net income $242,571 $231,531 Adjustments to reconcile net income to net cash provided from operating activities -- Depreciation and amortization 304,526 280,856 Deferred income taxes and investment tax credits, net (15,964) 6,396 Other, net 169,471 33,791 Changes in certain current assets and liabilities -- Receivables, net (10,306) 9,255 Fossil fuel stock 3,870 (34,316) Materials and supplies (3,836) (3,354) Accounts payable (21,728) (66,228) Energy cost recovery, retail (62,437) (4,262) Other 27,948 40,918 --------------- ---------------- Net cash provided from operating activities 634,115 494,587 --------------- ---------------- Investing Activities: Gross property additions (456,786) (353,516) Other (66,152) (44,126) --------------- ---------------- Net cash used for investing activities (522,938) (397,642) --------------- ---------------- Financing Activities: Increase (decrease) in notes payable, net (238,082) 147,701 Proceeds -- Other long-term debt 300,000 338,000 Preferred securities - 200,000 Capital contributions from parent company 269,000 - Retirements -- First mortgage bonds (100,000) (209,000) Other long-term debt - (50,000) Preferred stock (383) (35,732) Payment of preferred stock dividends (318) (378) Payment of common stock dividends (275,100) (266,800) Other (85,183) (212,429) --------------- ---------------- Net cash used for financing activities (130,066) (88,638) --------------- ---------------- Net Change in Cash and Cash Equivalents (18,889) 8,307 Cash and Cash Equivalents at Beginning of Period 34,660 16,272 --------------- ---------------- Cash and Cash Equivalents at End of Period $ 15,771 $ 24,579 =============== ================ Supplemental Cash Flow Information: Cash paid during the period for -- Interest (net of amount capitalized) $133,263 $126,412 Income taxes (net of refunds) $54,164 $88,524 The accompanying notes as they relate to GEORGIA are an integral part of these condensed statements.
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GEORGIA POWER COMPANY CONDENSED BALANCE SHEETS At June 30, 2000 At December 31, Assets (Unaudited) 1999 ------------------ ------------------- (in thousands) Current Assets: Cash and cash equivalents $ 15,771 $ 34,660 Receivables -- Customer accounts receivable 506,203 438,161 Other accounts and notes receivable 107,083 102,544 Affiliated companies 12,199 16,006 Accumulated provision for uncollectible accounts (5,100) (7,000) Fossil fuel stock, at average cost 122,428 126,298 Materials and supplies, at average cost 257,730 253,894 Other 93,528 63,990 ------------------ ------------------- Total current assets 1,109,842 1,028,553 ------------------ ------------------- Property, Plant, and Equipment: In service 16,171,016 15,798,624 Less accumulated provision for depreciation 6,775,426 6,538,574 ------------------ ------------------- 9,395,590 9,260,050 Nuclear fuel, at amortized cost 114,783 119,288 Construction work in progress 451,669 425,975 ------------------ ------------------- Total property, plant, and equipment 9,962,042 9,805,313 ------------------ ------------------- Other Property and Investments: Equity investments in unconsolidated subsidiaries 27,893 25,024 Nuclear decommissioning trusts 410,900 371,914 Other 32,191 33,766 ------------------ ------------------- Total other property and investments 470,984 430,704 ------------------ ------------------- Deferred Charges and Other Assets: Deferred charges related to income taxes 577,945 590,893 Prepaid pension costs 173,171 145,801 Debt expense, being amortized 54,743 55,824 Premium on reacquired debt, being amortized 178,476 99,331 Other 123,759 120,441 ------------------ ------------------- Total deferred charges and other assets 1,108,094 1,012,290 ------------------ ------------------- Total Assets $12,650,962 $12,276,860 ================== =================== The accompanying notes as they relate to GEORGIA are an integral part of these condensed statements.
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GEORGIA POWER COMPANY CONDENSED BALANCE SHEETS At June 30, 2000 At December 31, Liabilities and Stockholder's Equity (Unaudited) 1999 ------------------ ------------------- (in thousands) Current Liabilities: Securities due within one year $ 51,240 $155,772 Notes payable and commercial paper 398,159 636,241 Accounts payable -- Affiliated 90,510 76,591 Other 288,634 346,785 Customer deposits 77,238 74,695 Taxes accrued -- Income taxes 129,798 7,914 Other 95,660 127,414 Interest accrued 47,848 58,665 Vacation pay accrued 37,927 38,143 Other 99,566 153,767 ------------------ ------------------- Total current liabilities 1,316,580 1,675,987 ------------------ ------------------- Long-term debt 2,992,806 2,688,358 ------------------ ------------------- Deferred Credits and Other Liabilities: Accumulated deferred income taxes 2,213,027 2,202,565 Deferred credits related to income taxes 257,777 267,083 Accumulated deferred investment tax credits 359,714 367,114 Employee benefits provisions 187,719 181,529 Other 345,178 151,812 ------------------ ------------------- Total deferred credits and other liabilities 3,363,415 3,170,103 ------------------ ------------------- Company obligated mandatorily redeemable preferred securities of subsidiary trusts holding company junior subordinated notes 789,250 789,250 ------------------ ------------------- Preferred stock 14,569 14,952 ------------------ ------------------- Common Stockholder's Equity Common stock, without par value-- Authorized - 15,000,000 shares Outstanding - 7,761,500 shares 344,250 344,250 Paid-in capital 2,084,983 1,815,983 Premium on preferred stock 40 40 Retained earnings 1,745,069 1,777,937 ------------------ ------------------- Total common stockholder's equity 4,174,342 3,938,210 ------------------ ------------------- Total Liabilities and Stockholder's Equity $12,650,962 $12,276,860 ================== =================== The accompanying notes as they relate to GEORGIA are an integral part of these condensed statements.
32 GEORGIA POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION SECOND QUARTER 2000 vs. SECOND QUARTER 1999 AND YEAR-TO-DATE 2000 vs. YEAR-TO-DATE 1999 RESULTS OF OPERATIONS Earnings GEORGIA's net income after dividends on preferred stock for the second quarter and year-to-date 2000 was $148.5 million and $242.2 million, respectively, compared to $138.6 million and $230.2 million for the corresponding periods in 1999. The second quarter 2000 increase of $10.0 million or 7.2% and the year-to-date increase of $12.1 million or 5.2% are primarily attributed to higher operating revenues which were partially offset by higher operating expenses, including additional accelerated amortization and depreciation required under GEORGIA's three-year rate order.
Significant income statement items appropriate for discussion include the following: Increase (Decrease) --------------------------------------------------------------- Second Quarter Year-To-Date ------------------------------- ------------------------------- (in thousands) % (in thousands) % Retail sales..................................... $104,948 10.6 $152,199 8.2 Sales for resale - non-affiliates............... 8,249 15.3 10,183 10.6 Sales for resale - affiliates.................... 16,738 115.6 20,765 92.8 Other operating revenues......................... (806) (2.5) 6,691 12.8 Fuel expense..................................... 31,822 13.4 64,517 15.5 Purchased power - non-affiliates................. 37,678 78.9 48,630 60.9 Other operation expense.......................... 17,208 9.3 7,909 2.2 Depreciation and amortization.................... 34,514 24.8 59,846 22.0
Retail sales. Retail sales revenues were higher for the second quarter and year-to-date 2000 when compared to the same periods in 1999 due mainly to increases in retail energy sales of 7.5% and 6.1% for the respective periods. Retail energy sales to residential, commercial and industrial customers were up by 11.3%, 9.5% and 3.4% for the second quarter of 2000 and 8.0%, 8.5% and 3.0% year-to-date 2000, respectively. Retail energy sales increased due primarily to growth in the number of customers and warmer weather than in the corresponding periods of 1999. Sales for resale - non-affiliates. The increases in these sales to non-affiliates in the second quarter and year-to-date 2000 are attributed to higher demand for energy by non-affiliates. These transactions did not have a significant impact on earnings. Sales for resale - affiliates. Revenues from sales for resale to affiliated companies within the SOUTHERN system will vary from period to period depending on demand and the availability and cost of generating resources at each company. These transactions did not have a significant impact on earnings. Other operating revenues. The year-to-date 2000 increase is primarily attributed to the recognition of the open-access transmission tariff settlement in 1999. 33 GEORGIA POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Fuel expense. This expense is higher for the second quarter and year-to-date 2000, when compared to the same periods of the prior year, due primarily to increased generation from fossil-fueled plants to meet higher energy demands and higher natural gas and oil prices. These expenses do not have a significant impact on earnings since energy expenses are generally offset by energy revenues. Purchased power from non-affiliates. Increased demand for energy as well as the drought in GEORGIA's service area, and increased prices for natural gas and oil, resulted in the increases in purchased power for the current quarter and year-to-date 2000 when compared to the same periods of 1999. These expenses do not have a significant impact on earnings since energy expenses are generally offset by energy revenues. Other operation expense. These expenses were higher in the second quarter and year-to-date 2000 as compared to the corresponding periods in the prior year due primarily to increased costs related to employee severance costs and customer service expense. Depreciation and amortization expense. For the second quarter and year-to-date 2000, the increases in this expense are attributable to accelerated amortization and depreciation required by the three-year rate order which became effective January 1, 1999 and increased in-service property, plant and equipment. See Note (H) in the "Notes to the Condensed Financial Statements" herein for further details regarding the retail rate order. Future Earnings Potential The results of operations discussed above are not necessarily indicative of future earnings potential. The level of future earnings depends on numerous factors including weather, regulatory matters and energy sales. With the enactment of the Energy Act and new legislation being discussed at federal and state levels to expand customer choice, GEORGIA is positioning the business to meet the challenge of increasing competition. For additional information, see Item 1 - BUSINESS - "Competition" and Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Future Earnings Potential" of GEORGIA in the Form 10-K. Effective January 1, 1999, GEORGIA began operating under a new three-year retail rate order. Under the order, GEORGIA's earnings are evaluated against a retail return on common equity range of 10% to 12.5%. In compliance with the order, retail rates were decreased by $24 million on an annual basis effective January 1, 2000. Reference is made to Note (H) in the "Notes to the Condensed Financial Statements" herein and Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Future Earnings Potential" of GEORGIA in the Form 10-K for additional information. Compliance costs related to the Clean Air Act and other environmental issues could affect earnings. For additional information, see Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Environmental Issues" of GEORGIA in the Form 10-K. 34 GEORGIA POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION The FASB issued Statement No. 133, Accounting for Derivative Instruments and Hedging Activities, which must be adopted by January 2001. In June 2000, the FASB issued Statement No. 138, an amendment of FASB Statement No. 133, Accounting for Certain Derivative Instruments and Certain Hedging Activities. These statements establish accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts - and for hedging activities. GEORGIA has not yet quantified the impact of adopting these statements on its financial statements; however, the adoption could increase volatility in earnings. Reference is made to Notes (B), (C), (H), (I) and (O) in the "Notes to the Condensed Financial Statements" herein for discussion of various contingencies and other matters which may affect future earnings potential. FINANCIAL CONDITION Overview The major change in GEORGIA's financial condition during the first six months of 2000 was the addition of approximately $456.8 million to utility plant. The funds for these additions and other capital requirements were derived primarily from operations and capital contributions from SOUTHERN. See GEORGIA's Condensed Statements of Cash Flows for further details. Financing Activities During the first six months of 2000, maturities of first mortgage bonds by GEORGIA totaled $100 million. In February 2000, GEORGIA issued $300 million of floating rate senior notes due February 22, 2002. The proceeds of the sale were used to repay a portion of GEORGIA's outstanding short-term indebtedness. Capital Requirements Reference is made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS of GEORGIA under "Liquidity and Capital Requirements" and "Environmental Issues" in the Form 10-K for a description of GEORGIA's capital requirements for its construction program and environmental compliance efforts. Sources of Capital In addition to the financing activities previously described herein, GEORGIA plans to obtain the funds required for construction and other purposes from sources similar to those used in the past. The amount, type and timing of any financings--if needed--will depend upon maintenance of adequate earnings, regulatory approval, prevailing market conditions and other factors. See Item 1 - - BUSINESS - "Financing Programs" in the Form 10-K for additional information. 35 GEORGIA POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION To meet short-term cash needs and contingencies, GEORGIA had at June 30, 2000, approximately $15.8 million of cash and cash equivalents and approximately $1.8 billion of unused credit arrangements with banks. The credit arrangements provide liquidity support to GEORGIA's obligations with respect to variable rate pollution control bonds and its commercial paper program. At June 30, 2000, GEORGIA had outstanding $398.2 million of commercial paper. Management believes that the need for working capital can be adequately met by utilizing lines of credit without maintaining large cash balances. 36 Exhibit 1 ARTHUR ANDERSEN REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS TO GEORGIA POWER COMPANY: We have reviewed the accompanying condensed balance sheet of GEORGIA POWER COMPANY (a Georgia corporation) as of June 30, 2000, and the related condensed statements of income for the three-month and six-month periods ended June 30, 2000 and 1999 and cash flows for the six-month periods ended June 30, 2000 and 1999. These financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the United States, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the financial statements referred to above for them to be in conformity with accounting principles generally accepted in the United States. We have previously audited, in accordance with auditing standards generally accepted in the United States, the balance sheet of GEORGIA POWER COMPANY as of December 31, 1999 (not presented herein), and, in our report dated February 16, 2000, we expressed an unqualified opinion on that statement. In our opinion, the information set forth in the accompanying condensed balance sheet as of December 31, 1999, is fairly stated, in all material respects, in relation to the balance sheet from which it has been derived. /s/ Arthur Andersen LLP Atlanta, Georgia August 8, 2000 37 GULF POWER COMPANY 38
GULF POWER COMPANY CONDENSED STATEMENTS OF INCOME (UNAUDITED) For the Three Months For the Six Months Ended June 30, Ended June 30, 2000 1999 2000 1999 -------------------------------- ------------------------------ (in thousands) (in thousands) Operating Revenues: Retail sales $142,360 $128,214 $259,167 $235,495 Sales for resale -- Non-affiliates 16,609 14,932 27,587 26,126 Affiliates 20,566 13,610 29,233 20,681 Other revenues 2,585 10,059 4,631 19,019 -------------- ---------------- --------------- -------------- Total operating revenues 182,120 166,815 320,618 301,321 -------------- ---------------- --------------- -------------- Operating Expenses: Operation -- Fuel 57,020 53,208 98,663 91,961 Purchased power -- Non-affiliates 15,781 9,138 22,395 13,294 Affiliates 3,578 3,100 6,736 6,675 Other 29,979 27,780 57,167 54,922 Maintenance 15,346 15,903 29,522 32,496 Depreciation and amortization 16,443 16,034 32,810 32,112 Taxes other than income taxes 13,468 12,399 26,813 24,943 -------------- ---------------- --------------- -------------- Total operating expenses 151,615 137,562 274,106 256,403 -------------- ---------------- --------------- -------------- Operating Income 30,505 29,253 46,512 44,918 Other Income (Expense): Interest income 289 260 727 501 Other, net (934) (91) (1,438) (903) -------------- ---------------- --------------- -------------- Earnings Before Interest and Income Taxes 29,860 29,422 45,801 44,516 -------------- ---------------- --------------- -------------- Interest Charges and Other: Interest on long-term debt 5,726 5,032 11,346 9,982 Interest on notes payable 1,010 871 1,783 1,356 Amortization of debt discount, premium and expense, net 532 491 1,035 989 Other interest charges, net 228 333 400 611 Distributions on preferred securities of subsidiary 1,550 1,550 3,100 3,100 -------------- ---------------- --------------- -------------- Total interest charges and other, net 9,046 8,277 17,664 16,038 -------------- ---------------- --------------- -------------- Earnings Before Income Taxes 20,814 21,145 28,137 28,478 Income taxes 7,833 7,865 10,449 10,345 -------------- ---------------- --------------- -------------- Net Income 12,981 13,280 17,688 18,133 Dividends on Preferred Stock 54 54 108 108 -------------- ---------------- --------------- -------------- Net Income After Dividends on Preferred Stock $12,927 $13,226 $17,580 $18,025 ============== ================ =============== ============== The accompanying notes as they relate to GULF are an integral part of these condensed statements.
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GULF POWER COMPANY CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) For the Six Months Ended June 30, 2000 1999 --------------- --------------- (in thousands) Operating Activities: Net income $17,688 $18,133 Adjustments to reconcile net income to net cash provided from operating activities -- Depreciation and amortization 34,793 34,100 Deferred income taxes and investment tax credits, net (8,245) (1,952) Other, net 5,202 5,824 Changes in certain current assets and liabilities -- Receivables, net (11,728) (12,514) Fossil fuel stock (1,914) (22,869) Materials and supplies 1,335 (831) Accounts payable 5,789 (4,082) Other 27,476 6,709 --------------- --------------- Net cash provided from operating activities 70,396 22,518 --------------- --------------- Investing Activities: Gross property additions (48,452) (33,242) Other (9,289) (10,221) --------------- --------------- Net cash used for investing activities (57,741) (43,463) --------------- --------------- Financing Activities: Increase (decrease) in notes payable, net 3,000 53,500 Retirements -- Other long-term debt (924) - Payment of preferred stock dividends (108) (117) Payment of common stock dividends (29,500) (30,100) Other (22) (4) --------------- --------------- Net cash provided from (used for) financing activities (27,554) 23,279 --------------- --------------- Net Change in Cash and Cash Equivalents (14,899) 2,334 Cash and Cash Equivalents at Beginning of Period 15,753 969 --------------- --------------- Cash and Cash Equivalents at End of Period $854 $3,303 =============== =============== Supplemental Cash Flow Information: Cash paid during the period for -- Interest (net of amount capitalized) $16,335 $13,089 Income taxes (net of refunds) 5,207 2,412 The accompanying notes as they relate to GULF are an integral part of these condensed statements.
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GULF POWER COMPANY CONDENSED BALANCE SHEETS At June 30, 2000 At December 31, Assets (Unaudited) 1999 --------------- -------------------- (in thousands) Current Assets: Cash and cash equivalents $ 854 $ 15,753 Receivables -- Customer accounts receivable 68,095 55,108 Other accounts and notes receivable 5,874 4,325 Affiliated companies 5,203 7,104 Accumulated provision for uncollectible accounts (1,933) (1,026) Fossil fuel stock, at average cost 31,783 29,869 Materials and supplies, at average cost 28,753 30,088 Regulatory clauses under recovery 3,952 11,611 Other 6,943 5,354 --------------- -------------------- Total current assets 149,524 158,186 --------------- -------------------- Property, Plant, and Equipment: In service 1,872,767 1,853,664 Less accumulated provision for depreciation 851,079 821,970 --------------- -------------------- 1,021,688 1,031,694 Construction work in progress 59,404 34,164 --------------- -------------------- Total property, plant, and equipment 1,081,092 1,065,858 --------------- -------------------- Other Property and Investments 4,475 1,481 --------------- -------------------- Deferred Charges and Other Assets: Deferred charges related to income taxes 16,597 25,264 Prepaid pension costs 20,369 17,734 Debt expense, being amortized 2,470 2,526 Premium on reacquired debt, being amortized 16,602 17,360 Other 18,681 20,086 --------------- -------------------- Total deferred charges and other assets 74,719 82,970 --------------- -------------------- Total Assets $1,309,810 $1,308,495 =============== ==================== The accompanying notes as they relate to GULF are an integral part of these condensed statements.
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GULF POWER COMPANY CONDENSED BALANCE SHEETS At June 30, 2000 At December 31, Liabilities and Stockholder's Equity (Unaudited) 1999 --------------- -------------------- (in thousands) Current Liabilities: Notes payable $ 58,000 $ 55,000 Accounts payable -- Affiliated 13,869 14,878 Other 24,569 22,581 Customer deposits 13,219 12,778 Taxes accrued -- Income taxes 18,312 4,889 Other 12,669 7,707 Interest accrued 8,786 9,255 Vacation pay accrued 4,199 4,199 Other 7,157 4,961 --------------- -------------------- Total current liabilities 160,780 136,248 --------------- -------------------- Long-term debt 366,724 367,449 --------------- -------------------- Deferred Credits and Other Liabilities: Accumulated deferred income taxes 156,530 162,776 Deferred credits related to income taxes 39,947 49,693 Accumulated deferred investment tax credits 26,752 27,712 Employee benefits provisions 33,735 31,735 Other 25,713 21,333 --------------- -------------------- Total deferred credits and other liabilities 282,677 293,249 --------------- -------------------- Company obligated mandatorily redeemable preferred securities of subsidiary trusts holding company junior subordinated notes 85,000 85,000 --------------- -------------------- Preferred stock 4,236 4,236 --------------- -------------------- Common Stockholder's Equity Common stock, without par value-- Authorized - 992,717 shares Outstanding - 992,717 shares 38,060 38,060 Paid-in capital 221,254 221,254 Premium on preferred stock 12 12 Retained earnings 151,067 162,987 --------------- -------------------- Total common stockholder's equity 410,393 422,313 --------------- -------------------- Total Liabilities and Stockholder's Equity $1,309,810 $1,308,495 =============== ==================== The accompanying notes as they relate to GULF are an integral part of these condensed statements.
42 GULF POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION SECOND QUARTER 2000 vs. SECOND QUARTER 1999 AND YEAR-TO-DATE 2000 vs. YEAR-TO-DATE 1999 RESULTS OF OPERATIONS Earnings GULF's net income after dividends on preferred stock for the second quarter and year-to-date 2000 was $12.9 million and $17.6 million, respectively, compared to $13.2 million and $18.0 million for the same periods in 1999. Although operating revenues increased, earnings decreased slightly due primarily to changes in interest on long-term debt and notes payable.
Significant income statement items appropriate for discussion include the following: Increase (Decrease) --------------------------------------------------------------- Second Quarter Year-To-Date ------------------------------- ------------------------------- (in thousands) % (in thousands) % Retail sales..................................... $14,146 11.0 $23,672 10.1 Sales for resale - non-affiliates................ 1,677 11.2 1,461 5.6 Sales for resale - affiliates.................... 6,956 51.1 8,552 41.4 Other operating revenues......................... (7,474) (74.3) (14,388) (75.7) Fuel expense..................................... 3,812 7.2 6,702 7.3 Purchased power - non-affiliates................. 6,643 72.7 9,101 68.5 Other operation expense.......................... 2,199 7.9 2,245 4.1 Maintenance expense.............................. (557) (3.5) (2,974) (9.2) Taxes other than income taxes.................... 1,069 8.6 1,870 7.5 Other, net....................................... (843) N/M (535) (59.2) Interest on long-term debt....................... 694 13.8 1,364 13.7 N/M - Not meaningful
Retail sales. Excluding the recovery of fuel expense and certain other expenses that do not affect net income, retail sales revenues increased slightly during the second quarter and year-to-date 2000 when compared to the corresponding periods of the prior year. Retail energy sales increased 4.9% and 5.1% during the second quarter and year-to-date 2000, respectively, when compared to the same periods in 1999. These increases were due primarily to growth in the number of retail customers served by GULF. The year-to-date 2000 increase in energy sales was offset, for the most part, by retail base rate reductions and the recording of estimated revenues to be shared under GULF's Sharing Plan, which was approved by the Florida PSC in October 1999. For additional information regarding the reduction to retail base rates and the Sharing Plan, see Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Future Earnings Potential" of GULF in the Form 10-K. Sales for resale - non-affiliates. Increased revenues from unit power energy sales were the primary reason for the second quarter and year-to-date 2000 increases when compared to the same periods in 1999. Energy is usually sold at variable cost and has no significant impact on net income. 43 GULF POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Sales for resale - affiliates. Revenues from sales for resale to affiliated companies within the SOUTHERN system will vary from period to period depending on demand and the availability and cost of generating resources at each company. These transactions do not have a significant impact on earnings. Other operating revenues. These revenues were down in the second quarter and year-to-date 2000 due primarily to a decrease in fuel, conservation and capacity clause revenues. The decreases in these revenues were a result of adjustments to reflect differences between recoverable costs and the amounts actually reflected in current rates. The recovery provisions generally equal the related expenses and have no material effect on net income. Fuel expense. For the second quarter and year-to-date 2000, fuel expense increased due mainly to increased generation in order to meet the demand for energy and a higher average cost of fuel consumed. Purchased power from non-affiliates. The increases during the second quarter and year-to-date 2000 when compared to the same periods in the prior year are primarily attributed to an increase in energy purchases due to increased power marketing activities, the majority of which were resold to non-affiliated third parties. These transactions had no significant effect on net income. Other operation expense. These expenses were higher for the second quarter and year-to-date 2000 due primarily to increased expenses associated with higher variable payroll costs, as well as a higher provision for uncollectible accounts when compared to the same periods in 1999. Maintenance expense. For the second quarter and year-to-date 2000, these expenses decreased when compared to the corresponding periods of 1999 due primarily to scheduled outages during the first half of 1999. Taxes other than income taxes. The increases in these taxes for the current quarter and year-to-date 2000 are primarily due to higher franchise fees and gross receipt taxes related to increases in GULF's billed revenues. These collections are also included in other operating revenues and have no impact on earnings. Other, net. The second quarter 2000 decrease, when compared to the same period in 1999, is attributed, for the most part, to expenses related to the discontinuance of GULF's appliance sales division. The year-to-date 2000 decrease is primarily attributed to the discontinuance of GULF's appliance sales division, as well as an increase in expenditures related to environmental advocacy when compared to the same period in 1999. Interest on long-term debt. Interest on long-term debt increased during the second quarter and year-to-date 2000 due mainly to the issuance of senior notes during the latter half of 1999. Future Earnings Potential The results of operations discussed above are not necessarily indicative of future earnings potential. The level of future earnings depends on numerous factors ranging from weather to energy sales growth to a less regulated, more competitive environment. With the enactment of the Energy Act and new legislation being discussed at federal and state levels to expand customer choice, GULF is positioning the business to meet the challenge of increasing competition. For 44 GULF POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION additional information, see Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Future Earnings Potential" of GULF and Item 1 - BUSINESS - "Competition" in the Form 10-K. Compliance costs related to the Clean Air Act could affect earnings if such costs are not fully recovered through GULF's Environmental Cost Recovery Clause. For additional information about the Clean Air Act and other environmental issues, see Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Environmental Matters" of GULF in the Form 10-K. On November 4, 1999, the Florida PSC approved GULF's plan to reduce its authorized rate of return, reduce retail base rates and share revenues with its customers. For additional information, see Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Future Earnings Potential" of GULF in the Form 10-K. On December 20, 1999, the FERC issued its final rule on RTOs. Reference is made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Future Earnings Potential" of GULF in the Form 10-K for information on this matter. Reference is also made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Environmental Protection Agency Litigation" and Note 3 to the financial statements of GULF in the Form 10-K for information on EPA litigation. The FASB issued Statement No. 133, Accounting for Derivative Instruments and Hedging Activities, which must be adopted by January 2001. In June 2000, the FASB issued Statement No. 138, an amendment of FASB Statement No. 133, Accounting for Certain Derivative Instruments and Certain Hedging Activities. These statements establish accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts - and for hedging activities. GULF has not yet quantified the impact of adopting these statements on its financial statements; however, the adoption could increase volatility in earnings. Reference is made to Notes (B) and (O) in the "Notes to the Condensed Financial Statements" herein for discussion of various contingencies and other matters which may affect future earnings potential. FINANCIAL CONDITION Overview Major changes in GULF's financial condition during the first six months of 2000 included the addition of approximately $48.5 million to utility plant. The funds for these additions and other capital requirements were derived primarily from operations. See GULF's Condensed Statements of Cash Flows for further details. Financing Activities GULF plans to continue, to the extent possible, a program to retire higher-cost debt and preferred stock and replace these securities with lower-cost capital. 45 GULF POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Capital Requirements Reference is made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS of GULF under "Capital Requirements for Construction," "Environmental Matters" and "Other Capital Requirements" in the Form 10-K for a description of GULF's capital requirements for its construction program, environmental compliance efforts and maturing debt. Sources of Capital In addition to the financing activities previously described herein, GULF plans to obtain the funds required for construction and other purposes from sources similar to those used in the past. The amount, type and timing of any financings--if needed--will depend upon maintenance of adequate earnings, regulatory approval, prevailing market conditions and other factors. See Item 1 - - BUSINESS - "Financing Programs" in the Form 10-K for additional information. To meet short-term cash needs and contingencies, GULF had at June 30, 2000, approximately $854 thousand of cash and cash equivalents and $46.5 million of unused committed lines of credit with banks in addition to $61.9 million liquidity support for GULF's obligations with respect to variable rate pollution control bonds. At June 30, 2000, GULF had $58 million outstanding of notes payable to banks. Management believes that the need for working capital can be adequately met by utilizing lines of credit without maintaining large cash balances. 46 MISSISSIPPI POWER COMPANY 47
MISSISSIPPI POWER COMPANY CONDENSED STATEMENTS OF INCOME (UNAUDITED) For the Three Months For the Six Months Ended June 30, Ended June 30, 2000 1999 2000 1999 -------------- ---------------- ---------------- -------------- (in thousands) (in thousands) Operating Revenues: Retail sales $132,749 $120,047 $233,711 $212,065 Sales for resale -- Non-affiliates 35,787 32,078 62,349 59,307 Affiliates 4,303 3,257 8,884 4,292 Other revenues 3,189 3,208 5,789 5,361 -------------- ---------------- ---------------- -------------- Total operating revenues 176,028 158,590 310,733 281,025 -------------- ---------------- ---------------- -------------- Operating Expenses: Operation -- Fuel 52,513 46,706 89,573 78,228 Purchased power -- Non-affiliates 13,152 7,162 17,160 9,507 Affiliates 11,433 7,497 23,055 16,399 Other 27,954 27,683 54,685 54,730 Maintenance 17,247 14,265 30,184 25,866 Depreciation and amortization 13,508 11,780 25,221 23,569 Taxes other than income taxes 12,091 12,208 24,132 23,315 -------------- ---------------- ---------------- -------------- Total operating expenses 147,898 127,301 264,010 231,614 -------------- ---------------- ---------------- -------------- Operating Income 28,130 31,289 46,723 49,411 Other Income: Interest income 41 69 140 150 Other, net 437 587 791 1,221 -------------- ---------------- ---------------- -------------- Earnings Before Interest and Income Taxes 28,608 31,945 47,654 50,782 -------------- ---------------- ---------------- -------------- Interest Charges and Other: Interest on long-term debt 6,404 5,034 11,828 10,044 Interest on notes payable 624 874 1,669 1,286 Amortization of debt discount, premium and expense, net 366 361 723 717 Other interest charges, net 95 96 223 178 Distributions on preferred securities of subsidiary 699 699 1,398 1,398 -------------- ---------------- ---------------- -------------- Total interest charges and other, net 8,188 7,064 15,841 13,623 --------------- ---------------- ---------------- -------------- Earnings Before Income Taxes 20,420 24,881 31,813 37,159 Income taxes 7,684 9,424 11,852 14,006 --------------- ---------------- ---------------- -------------- Net Income 12,736 15,457 19,961 23,153 Dividends on Preferred Stock 504 504 1,007 1,007 -------------- ---------------- ---------------- -------------- Net Income After Dividends on Preferred Stock $12,232 $ 14,953 $18,954 $ 22,146 ============== ================ ================ ============== The accompanying notes as they relate to MISSISSIPPI are an integral part of these condensed statements.
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MISSISSIPPI POWER COMPANY CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) For the Six Months Ended June 30, 2000 1999 -------------- --------------- (in thousands) Operating Activities: Net income $19,961 $23,153 Adjustments to reconcile net income to net cash provided from operating activities -- Depreciation and amortization 27,444 25,637 Deferred income taxes and investment tax credits, net (2,669) 1,747 Other, net 6,407 (1,226) Changes in certain current assets and liabilities -- Receivables, net 245 (15,694) Fossil fuel stock 6,623 (12,453) Materials and supplies (391) (1,152) Accounts payable (8,686) (7,287) Other (4,035) (3,490) -------------- --------------- Net cash provided from operating activities 44,899 9,235 -------------- --------------- Investing Activities: Gross property additions (44,921) (26,700) Other (9,297) (6,879) -------------- --------------- Net cash used for investing activities (54,218) (33,579) -------------- --------------- Financing Activities: Increase (decrease) in notes payable, net (10,500) 56,000 Proceeds -- Other long-term debt 100,000 - Capital contributions from parent company 10,000 - Retirements -- Other long-term debt (50,681) (57) Payment of preferred stock dividends (1,007) (1,007) Payment of common stock dividends (27,400) (27,600) Other (253) (243) -------------- --------------- Net cash provided from financing activities 20,159 27,093 -------------- --------------- Net Change in Cash and Cash Equivalents 10,840 2,749 Cash and Cash Equivalents at Beginning of Period 173 1,327 -------------- --------------- Cash and Cash Equivalents at End of Period $11,013 $4,076 ============== =============== Supplemental Cash Flow Information: Cash paid during the period for -- Interest (net of amount capitalized) $13,776 $12,722 Income taxes (net of refunds) $104 $97 The accompanying notes as they relate to MISSISSIPPI are an integral part of these condensed statements.
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MISSISSIPPI POWER COMPANY CONDENSED BALANCE SHEETS At June 30, 2000 At December 31, Assets (Unaudited) 1999 -------------------- ------------------- (in thousands) Current Assets: Cash and cash equivalents $ 11,013 $ 173 Receivables -- Customer accounts receivable 77,358 61,274 Other accounts and notes receivable 17,723 23,490 Affiliated companies 5,241 16,097 Accumulated provision for uncollectible accounts (530) (697) Fossil fuel stock, at average cost 19,174 25,797 Materials and supplies, at average cost 21,029 20,638 Other 12,074 10,013 -------------------- ------------------- Total current assets 163,082 156,785 -------------------- ------------------- Property, Plant, and Equipment: In service 1,653,678 1,601,399 Less accumulated provision for depreciation 648,467 626,841 -------------------- ------------------- 1,005,211 974,558 Construction work in progress 59,043 68,721 -------------------- ------------------- Total property, plant, and equipment 1,064,254 1,043,279 -------------------- ------------------- Other Property and Investments 2,280 1,389 -------------------- ------------------- Deferred Charges and Other Assets: Deferred charges related to income taxes 14,333 21,557 Prepaid pension costs 4,368 2,488 Debt expense, being amortized 4,645 4,355 Premium on reacquired debt, being amortized 7,578 8,154 Other 10,753 13,129 -------------------- ------------------- Total deferred charges and other assets 41,677 49,683 -------------------- ------------------- Total Assets $1,271,293 $1,251,136 ==================== =================== The accompanying notes as they relate to MISSISSIPPI are an integral part of these condensed statements.
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MISSISSIPPI POWER COMPANY CONDENSED BALANCE SHEETS At June 30, 2000 At December 31, Liabilities and Stockholders' Equity (Unaudited) 1999 -------------------- ------------------- (in thousands) Current Liabilities: Securities due within one year $ 30,020 $ 30,020 Notes payable 47,000 57,500 Accounts payable -- Affiliated 13,334 17,002 Other 33,878 43,105 Customer deposits 4,522 3,749 Taxes accrued -- Income taxes 19,674 6,865 Other 20,462 35,534 Interest accrued 5,815 6,733 Vacation pay accrued 5,218 5,218 Other 8,549 7,497 -------------------- ------------------- Total current liabilities 188,472 213,223 -------------------- ------------------- Long-term debt 371,178 321,802 -------------------- ------------------- Deferred Credits and Other Liabilities: Accumulated deferred income taxes 136,979 139,564 Deferred credits related to income taxes 26,823 34,765 Accumulated deferred investment tax credits 24,088 24,695 Employee benefits provisions 34,773 34,268 Workforce reduction plan 10,494 11,272 Other 18,155 12,770 -------------------- ------------------- Total deferred credits and other liabilities 251,312 257,334 -------------------- ------------------- Company obligated mandatorily redeemable preferred securities of subsidiary trust holding company junior subordinated notes 35,000 35,000 -------------------- ------------------- Preferred stock 31,809 31,809 -------------------- ------------------- Common Stockholder's Equity Common stock, par value $40 per share -- Authorized - 6,000,000 shares Outstanding - 5,608,955 shares Par value 37,691 37,691 Paid-in capital 191,502 181,502 Premium on preferred stock 326 326 Retained earnings 164,003 172,449 -------------------- ------------------- Total common stockholder's equity 393,522 391,968 -------------------- ------------------- Total Liabilities and Stockholder's Equity $1,271,293 $1,251,136 ==================== =================== The accompanying notes as they relate to MISSISSIPPI are an integral part of these condensed statements.
51 MISSISSIPPI POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION SECOND QUARTER 2000 vs. SECOND QUARTER 1999 AND YEAR-TO-DATE 2000 vs. YEAR-TO-DATE 1999 RESULTS OF OPERATIONS Earnings MISSISSIPPI's net income after dividends on preferred stock for the second quarter and year-to-date 2000 was $12.2 million and $18.9 million, respectively, compared to $14.9 million and $22.1 million for the corresponding periods of 1999. Earnings decreased during the second quarter and year-to-date 2000 by $2.7 million or 18.2% and $3.2 million or 14.4%, respectively, due to increased operating expenses.
Significant income statement items appropriate for discussion include the following: Increase (Decrease) --------------------------------------------------------------- Second Quarter Year-To-Date ------------------------------- ------------------------------- (in thousands) % (in thousands) % Retail sales..................................... $12,702 10.6 $21,646 10.2 Sales for resale - non-affiliates................ 3,709 11.6 3,042 5.1 Sales for resale - affiliates.................... 1,046 32.1 4,592 107.0 Fuel expense..................................... 5,807 12.4 11,345 14.5 Purchased power - non-affiliates................. 5,990 83.6 7,653 80.5 Purchased power - affiliates..................... 3,936 52.5 6,656 40.6 Maintenance expense.............................. 2,982 20.9 4,318 16.7 Depreciation and amortization expense............ 1,728 14.7 1,652 7.0 Interest on long-term debt....................... 1,370 27.2 1,784 17.8
Retail sales. Retail sales revenues were up in the second quarter and year-to-date 2000 when compared to the same periods of 1999 due to increased energy sales to the retail sector of 5.7% and 7.6 %, respectively. Retail energy sales to residential, commercial and industrial customers increased by 5.5%, 3.7% and 7.1% for the second quarter 2000 and 5.2%, 6.3% and 9.6% for year-to-date 2000, respectively, due primarily to growth in the number of customers, warmer weather and new industrial load. Sales for resale - non-affiliates. The increases in these sales for the current quarter and year-to-date 2000 are primarily due to the continuing economic growth in the areas served by rural cooperatives in Mississippi. Sales for resale - affiliates and Purchased power - affiliates. Revenues from sales for resale to affiliated companies, as well as purchases of energy, within the SOUTHERN system will vary from period to period depending on demand and the availability and cost of generating resources at each company. These transactions do not have a significant impact on earnings. Fuel expense. Fuel expense increased during the second quarter and year-to-date 2000 due mainly to higher unit cost of fuel and, during the second quarter, increased generation to meet energy demands. Purchased power - non-affiliates. For the second quarter and year-to-date 2000, purchased power from non-affiliates increased as a result of increased demand for energy. 52 MISSISSIPPI POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Maintenance expense. These costs increased in the second quarter and year-to-date 2000 due to scheduled maintenance performed on steam power generation facilities. Depreciation and amortization. The increases in this expense for the current quarter and year-to-date 2000 when compared to the same periods in 1999 are primarily attributed to additional distribution facilities and a new higher depreciation rate approved by the Mississippi PSC. Interest on long-term debt. These interest payments were higher in the second quarter and year-to-date 2000 due mainly to higher interest rates being charged on a variable rate long-term debt outstanding. Future Earnings Potential The results of operations discussed above are not necessarily indicative of future earnings potential. The level of future earnings depends on numerous factors ranging from weather to energy sales growth to a less regulated, more competitive environment. Operating revenues will be affected by any changes in rates under the PEP and ECO plans. The PEP has proven to be a stabilizing force on electric rates, with only moderate changes in rates taking place. For additional information, see Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Future Earnings Potential" of MISSISSIPPI in the Form 10-K. See Note (J) in the "Notes to the Condensed Financial Statements" herein for information regarding an agreement between MISSISSIPPI and certain of its wholesale customers to reduce rates. With the enactment of the Energy Act and new legislation being discussed at federal and state levels to expand customer choice, MISSISSIPPI is positioning the business to meet the challenge of increasing competition. For additional information, see Item 1 - BUSINESS - "Competition" and Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Future Earnings Potential" of MISSISSIPPI in the Form 10-K. Compliance costs related to the Clean Air Act could affect earnings if such costs cannot be recovered. MISSISSIPPI's 2000 ECO Plan filing was approved, as filed, by the Mississippi PSC on March 22, 2000 and resulted in a slight decrease in customer prices. For additional information about the Clean Air Act and other environmental issues, see Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Environmental Matters" of MISSISSIPPI in the Form 10-K. On December 20, 1999, the FERC issued its final rule on RTOs. Reference is made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Future Earnings Potential" of MISSISSIPPI in the Form 10-K for information on this matter. Reference is also made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Environmental Matters" and Note 3 to the financial statements of MISSISSIPPI in the Form 10-K for information on EPA litigation. 53 MISSISSIPPI POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION In May 2000, the Mississippi PSC ordered that its docket reviewing restructuring of the electric industry in the State of Mississippi be suspended. The Mississippi PSC found that retail competition may not be in the public interest at this time and ordered that no further formal hearings would be held on this subject. It found that the current regulatory structure had produced reliable low cost power and "should not be changed without clear and convincing demonstration that change would be in the public interest." The Mississippi PSC will continue to monitor retail and wholesale restructuring activities throughout the United States and reserved "its right to order further formal hearings on the matter should new evidence demonstrate that retail competition would be in the public interest and all customers could receive a reduction in the total cost of their electric service." The FASB issued Statement No. 133, Accounting for Derivative Instruments and Hedging Activities, which must be adopted by January 2001. In June 2000, the FASB issued Statement No. 138, an amendment of FASB Statement No. 133, Accounting for Certain Derivative Instruments and Certain Hedging Activities. These statements establish accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts - and for hedging activities. MISSISSIPPI has not yet quantified the impact of adopting these statements on its financial statements; however, the adoption could increase volatility in earnings. Reference is made to Notes (B), (J) and (O) in the "Notes to the Condensed Financial Statements" herein for discussion of various contingencies and other matters which may affect future earnings potential. FINANCIAL CONDITION Overview Major changes in MISSISSIPPI's financial condition during the first six months of 2000 included the addition of approximately $44.9 million to utility plant. The funds for these additions and other capital requirements were derived primarily from operations and capital contributions from SOUTHERN. See MISSISSIPPI's Condensed Statements of Cash Flows for further details. Financing Activities In March 2000, MISSISSIPPI issued $100 million of floating rate senior notes due March 28, 2002. The proceeds were used to prepay bank loans of $45 million maturing in November 2001 and $5 million maturing in October 2002. The balance was used to repay a portion of MISSISSIPPI's outstanding short-term indebtedness. MISSISSIPPI plans to continue, to the extent possible, a program to retire higher-cost debt and replace these securities with lower-cost capital. 54 MISSISSIPPI POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Capital Requirements Reference is made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS of MISSISSIPPI under "Capital Requirements for Construction," "Environmental Matters" and "Other Capital Requirements" and Note 3 to the financial statements in the Form 10-K for a description of MISSISSIPPI's capital requirements for its construction program, environmental compliance efforts, sinking fund requirements and maturities of long-term debt. Sources of Capital In addition to the financing activities previously described herein, MISSISSIPPI plans to obtain the funds required for construction and other purposes from sources similar to those used in the past. The amount, type and timing of any financings--if needed--will depend upon maintenance of adequate earnings, regulatory approval, prevailing market conditions and other factors. See Item 1 - - BUSINESS - "Financing Programs" in the Form 10-K for additional information. To meet short-term cash needs and contingencies, MISSISSIPPI had at June 30, 2000, approximately $11 million of cash and cash equivalents and approximately $99.3 million of unused committed credit arrangements with banks. At June 30, 2000, MISSISSIPPI had short-term notes payable outstanding of $47 million. Management believes that the need for working capital can be adequately met by utilizing lines of credit without maintaining large cash balances. 55 SAVANNAH ELECTRIC AND POWER COMPANY 56
SAVANNAH ELECTRIC AND POWER COMPANY CONDENSED STATEMENTS OF INCOME (UNAUDITED) For the Three Months For the Six Months Ended June 30, Ended June 30, 2000 1999 2000 1999 ---------------- ---------------- --------------- -------------- (in thousands) (in thousands) Operating Revenues: Retail sales $70,323 $59,806 $120,108 $105,613 Sales for resale -- Non-affiliates 997 764 1,566 1,232 Affiliates 1,033 578 2,754 944 Other revenues 427 544 742 1,001 ---------------- ---------------- --------------- -------------- Total operating revenues 72,780 61,692 125,170 108,790 ---------------- ---------------- --------------- -------------- Operating Expenses: Operation -- Fuel 16,763 10,951 26,510 17,544 Purchased power -- Non-affiliates 5,405 2,361 7,593 3,453 Affiliates 8,570 10,276 16,620 19,453 Other 12,845 11,961 24,648 23,240 Maintenance 5,478 4,759 10,144 9,198 Depreciation and amortization 6,309 5,966 12,618 11,943 Taxes other than income taxes 3,310 2,923 6,354 5,827 ---------------- ---------------- --------------- -------------- Total operating expenses 58,680 49,197 104,487 90,658 ---------------- ---------------- --------------- -------------- Operating Income 14,100 12,495 20,683 18,132 Other Income (Expense): Interest income 38 27 79 63 Other, net (18) (496) (404) (919) ---------------- ---------------- --------------- -------------- Earnings Before Interest and Income Taxes 14,120 12,026 20,358 17,276 ---------------- ---------------- --------------- -------------- Interest Charges and Other: Interest on long-term debt 2,340 2,463 4,612 4,938 Interest on notes payable 581 177 1,034 198 Amortization of debt discount, premium and expense, net 241 235 481 468 Other interest charges, net 17 (7) 73 58 Distributions on preferred securities of subsidiary 685 685 1,370 1,370 ---------------- ---------------- --------------- -------------- Total interest charges and other, net 3,864 3,553 7,570 7,032 ---------------- ---------------- --------------- -------------- Earnings Before Income Taxes 10,256 8,473 12,788 10,244 Income taxes 3,969 3,205 4,858 3,767 ---------------- ---------------- --------------- -------------- Net Income $ 6,287 $ 5,268 $ 7,930 $ 6,477 ================ ================ =============== ============== The accompanying notes as they relate to SAVANNAH are an integral part of these condensed statements.
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SAVANNAH ELECTRIC AND POWER COMPANY CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) For the Six Months Ended June 30, 2000 1999 --------------- --------------- (in thousands) Operating Activities: Net income $7,930 $6,477 Adjustments to reconcile net income to net cash provided from operating activities -- Depreciation and amortization 13,495 12,757 Deferred income taxes and investment tax credits, net (1,563) (775) Other, net 3,326 546 Changes in certain current assets and liabilities -- Receivables, net (13,588) (12,533) Fossil fuel stock 94 (1,918) Materials and supplies (706) (255) Accounts payable 8,627 4,177 Other 2,468 670 --------------- --------------- Net cash provided from operating activities 20,083 9,146 --------------- --------------- Investing Activities: Gross property additions (13,325) (17,019) Other, net (3,279) (1,926) --------------- --------------- Net cash used for investing activities (16,604) (18,945) --------------- --------------- Financing Activities: Increase (decrease) in notes payable, net 7,400 35,400 Retirements -- First mortgage bonds - (15,800) Other long-term debt (304) (254) Payment of common stock dividends (12,300) (12,400) Other - 319 --------------- --------------- Net cash provided from (used for) financing activities (5,204) 7,265 --------------- --------------- Net Change in Cash and Cash Equivalents (1,725) (2,534) Cash and Cash Equivalents at Beginning of Period 6,553 5,962 --------------- --------------- Cash and Cash Equivalents at End of Period $4,828 $3,428 =============== =============== Supplemental Cash Flow Information: Cash paid during the period for -- Interest (net of amount capitalized) $5,774 $6,670 Income taxes (net of refunds) 2,867 224 The accompanying notes as they relate to SAVANNAH are an integral part of these condensed statements.
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SAVANNAH ELECTRIC AND POWER COMPANY CONDENSED BALANCE SHEETS At June 30, 2000 At December 31, Assets (Unaudited) 1999 ----------------- ------------------- (in thousands) Current Assets: Cash and cash equivalents $ 4,828 $ 6,553 Receivables -- Customer accounts receivable 30,229 20,752 Unrecovered retail fuel clause revenue 21,661 21,089 Other accounts and notes receivable 3,809 3,505 Affiliated companies 4,489 1,195 Accumulated provision for uncollectible accounts (296) (237) Fossil fuel stock, at average cost 7,015 7,109 Materials and supplies, at average cost 9,108 8,402 Other 737 2,869 ----------------- ------------------- Total current assets 81,580 71,237 ----------------- ------------------- Property, Plant, and Equipment: In service 813,040 804,096 Less accumulated provision for depreciation 371,392 360,639 ----------------- ------------------- 441,648 443,457 Construction work in progress 10,746 6,561 ----------------- ------------------- Total property, plant, and equipment 452,394 450,018 ----------------- ------------------- Other Property and Investments 2,003 1,506 ----------------- ------------------- Deferred Charges and Other Assets: Deferred charges related to income taxes 14,614 16,063 Cash surrender value of life insurance for deferred compensation plans 16,305 16,305 Debt expense, being amortized 3,080 3,155 Premium on reacquired debt, being amortized 7,980 8,385 Other 2,132 3,549 ----------------- ------------------- Total deferred charges and other assets 44,111 47,457 ----------------- ------------------- Total Assets $580,088 $570,218 ================= =================== The accompanying notes as they relate to SAVANNAH are an integral part of these condensed statements.
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SAVANNAH ELECTRIC AND POWER COMPANY CONDENSED BALANCE SHEETS At June 30, 2000 At December 31, Liabilities and Stockholders' Equity (Unaudited) 1999 ----------------- ------------------- (in thousands) Current Liabilities: Securities due within one year $ 30,669 $ 704 Notes payable 41,700 34,300 Accounts payable -- Affiliated 7,249 4,632 Other 15,495 11,118 Customer deposits 5,588 5,426 Taxes accrued -- Income taxes 2,223 3,046 Other 2,232 3,013 Interest accrued 4,582 3,237 Vacation pay accrued 2,185 2,142 Other 4,189 5,742 ----------------- ------------------- Total current liabilities 116,112 73,360 ----------------- ------------------- Long-term debt 116,878 147,147 ----------------- ------------------- Deferred Credits and Other Liabilities: Accumulated deferred income taxes 80,827 80,318 Deferred credits related to income taxes 18,108 19,687 Accumulated deferred investment tax credits 10,948 11,280 Deferred compensation plans 11,194 10,624 Employee benefits provisions 8,502 7,805 Other 7,042 5,150 ----------------- ------------------- Total deferred credits and other liabilities 136,621 134,864 ----------------- ------------------- Company obligated mandatorily redeemable preferred securities of subsidiary trusts holding company junior subordinated notes 40,000 40,000 ----------------- ------------------- Common Stockholder's Equity Common stock, par value $5 per share -- Authorized - 16,000,000 shares Outstanding - 10,844,635 shares Par value 54,223 54,223 Paid-in capital 9,788 9,787 Retained earnings 106,466 110,837 ----------------- ------------------- Total common stockholder's equity 170,477 174,847 ----------------- ------------------- Total Liabilities and Stockholder's Equity $580,088 $570,218 ================= =================== The accompanying notes as they relate to SAVANNAH are an integral part of these condensed statements.
60 SAVANNAH ELECTRIC AND POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION SECOND QUARTER 2000 vs. SECOND QUARTER 1999 AND YEAR-TO-DATE 2000 vs. YEAR-TO-DATE 1999 RESULTS OF OPERATIONS Earnings SAVANNAH's net income after dividends on preferred stock for the second quarter and year-to-date 2000 was $6.3 million and $7.9 million, respectively, as compared to $5.3 million and $6.5 million for the corresponding periods of 1999. Earnings for the current quarter and year-to-date 2000 were higher due primarily to increased operating revenues, partially offset by increased operating expenses.
Significant income statement items appropriate for discussion include the following: Increase (Decrease) --------------------------------------------------------------- Second Quarter Year-To-Date ------------------------------- ------------------------------- (in thousands) % (in thousands) % Retail sales..................................... $10,517 17.6 $14,495 13.7 Sales for resale - affiliates.................... 455 78.7 1,810 191.7 Fuel expense..................................... 5,812 53.1 8,966 51.1 Purchased power - non-affiliates................. 3,044 128.9 4,140 119.9 Purchased power - affiliates..................... (1,706) (16.6) (2,833) (14.6) Other operation expense.......................... 884 7.4 1,408 6.1 Maintenance expense.............................. 719 15.1 946 10.3 Interest on notes payable........................ 404 228.2 836 N/M N/M - Not meaningful
Retail sales. Retail sales revenues for the second quarter and year-to-date 2000 were higher than the same periods in 1999 due primarily to increased retail energy sales. Total retail energy sales were up 8.3% for the second quarter and 8.2% year-to-date 2000 due primarily to growth in the number of customers serviced by SAVANNAH and warmer temperatures during the second quarter of 2000. Energy sales to residential, commercial and industrial customers for the second quarter and year-to-date 2000 increased by 9.5%, 9.6% and 3.4% and 9.0%, 9.8% and 4.5%, respectively. Sales for resale - affiliates and Purchased power - affiliates. Revenues from sales for resale to affiliated companies, as well as purchases of energy, within the SOUTHERN system will vary from period to period depending on demand and the availability and cost of generating resources at each company. These transactions do not have a significant impact on earnings. Fuel expense. This expense increased in the second quarter and year-to-date 2000 reflecting higher fuel prices. The year-to-date 2000 increase was also affected by increased generation in order to meet energy demands. 61 SAVANNAH ELECTRIC AND POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Purchased power - non-affiliates. For the second quarter and year-to-date 2000, purchased power increased reflecting higher demand for energy and increased costs for purchased power. These transactions do not have a significant impact on earnings. Other operation expense. The increases in this item for the second quarter and year-to-date 2000, when compared to the same periods in 1999, result from higher employee benefits expenses. Maintenance expense. During the second quarter and year-to-date 2000, maintenance expense increased due mainly to an unscheduled maintenance outage at one of SAVANNAH's older plants and a major boiler outage at one of the coal plants. Interest on notes payable. The increases in this item for the second quarter and year-to-date 2000, when compared to the same periods in 1999, result from the increased outstanding amount of short-term debt and higher interest rates in 2000. Future Earnings Potential The results of operations discussed above are not necessarily indicative of future earnings potential. The level of future earnings depends on numerous factors ranging from weather to energy sales growth to a less regulated, more competitive environment. In 1998, the Georgia PSC approved a four-year accounting order for SAVANNAH. Reference is made to Note (K) in the "Notes to the Condensed Financial Statements" herein and Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Future Earnings Potential" of SAVANNAH in the Form 10-K for additional information. With the enactment of the Energy Act and new legislation being discussed at federal and state levels to expand customer choice, SAVANNAH is positioning the business to meet the challenge of increasing competition. For additional information, see Item 1 - BUSINESS - "Competition" and Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Future Earnings Potential" of SAVANNAH in the Form 10-K. Compliance costs related to the Clean Air Act could affect earnings if such costs cannot be offset. For additional information about the Clean Air Act and other environmental issues, see Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Environmental Matters" of SAVANNAH in the Form 10-K. On December 20, 1999, the FERC issued its final rule on RTOs. Reference is made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Future Earnings Potential" of SAVANNAH in the Form 10-K for information on this matter. Reference is also made to Item 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS - "Environmental Matters" and Note 3 to the financial statements of SAVANNAH in the Form 10-K for information on EPA litigation. 62 SAVANNAH ELECTRIC AND POWER COMPANY MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION The FASB issued Statement No. 133, Accounting for Derivative Instruments and Hedging Activities, which must be adopted by January 2001. In June 2000, the FASB issued Statement No. 138, an amendment of FASB Statement No. 133, Accounting for Certain Derivative Instruments and Certain Hedging Activities. These statements establish accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. SAVANNAH has not yet quantified the impact of adopting these statements on its financial statements; however, the adoption could increase volatility in earnings. Reference is made to Notes (B), (K) and (O) in the "Notes to the Condensed Financial Statements" herein for discussion of various contingencies and other matters which may affect future earnings potential. FINANCIAL CONDITION Overview Major changes in SAVANNAH's financial condition during the first six months of 2000 included the addition of approximately $13.3 million to utility plant. The funds for these additions and other capital requirements were derived primarily from operations and credit arrangements with banks. See SAVANNAH's Condensed Statements of Cash Flows for further details. Financing Activities SAVANNAH plans to continue, to the extent possible, a program to retire higher-cost debt and replace these obligations with lower-cost capital. Sources of Capital SAVANNAH plans to obtain the funds required for construction and other purposes from sources similar to those used in the past. The amount, type and timing of any financings--if needed--will depend upon maintenance of adequate earnings, regulatory approval, prevailing market conditions and other factors. See Item 1 - - BUSINESS - "Financing Programs" in the Form 10-K for additional information. To meet short-term cash needs and contingencies, SAVANNAH had at June 30, 2000, approximately $4.8 million of cash and cash equivalents and approximately $49.5 million of unused committed credit arrangements with banks. At June 30, 2000, SAVANNAH had $41.7 million outstanding of notes payable to banks. Since SAVANNAH has no major generating plants under construction, management believes that the need for working capital can be adequately met by utilizing lines of credit. 63 NOTES TO THE CONDENSED FINANCIAL STATEMENTS FOR THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES ALABAMA POWER COMPANY GEORGIA POWER COMPANY GULF POWER COMPANY MISSISSIPPI POWER COMPANY SAVANNAH ELECTRIC AND POWER COMPANY INDEX TO APPLICABLE NOTES TO FINANCIAL STATEMENTS BY REGISTRANT Registrant Applicable Notes SOUTHERN A, B, C, D, E, F, G, H, I, L, M, N, O, P, Q, R ALABAMA A, B, C, F, G, O GEORGIA A, B, C, H, I, O GULF A, B, O MISSISSIPPI A, B, J, O SAVANNAH A, B, K, O 64 THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES ALABAMA POWER COMPANY GEORGIA POWER COMPANY GULF POWER COMPANY MISSISSIPPI POWER COMPANY SAVANNAH ELECTRIC AND POWER COMPANY NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (A) The condensed financial statements of the registrants included herein have been prepared by each registrant, without audit, pursuant to the rules and regulations of the SEC. In the opinion of each registrant's management, the information regarding such registrant furnished herein reflects all adjustments necessary to present fairly the results of operations for the periods ended June 30, 2000 and 1999. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations, although each registrant believes that the disclosures regarding such registrant are adequate to make the information presented not misleading. It is suggested that these condensed financial statements of each registrant be read in conjunction with the financial statements of such registrant and the notes thereto included in the Form 10-K. Certain prior period amounts have been reclassified to conform with current period presentation. Due to seasonal variations in the demand for energy, operating results for the periods presented do not necessarily indicate operating results for the entire year. The condensed financial statements of ALABAMA and GEORGIA included herein have been reviewed by ALABAMA's and GEORGIA's independent public accountants as set forth in their reports included herein as Exhibit 1 to ALABAMA's and GEORGIA's condensed financial statements. (B) The integrated Southeast utilities are subject to the provisions of FASB Statement No. 71, Accounting for the Effects of Certain Types of Regulation. In the event that a portion of a company's operations is no longer subject to these provisions, the company would be required to write off related unrecoverable regulatory assets and liabilities, and determine if any other assets have been impaired. For additional information, see Note 1 to the financial statements of each registrant in Item 8 of the Form 10-K. (C) The staff of the SEC has questioned certain of the current accounting practices of the electric utility industry--including SOUTHERN's--regarding the recognition, measurement and classification of decommissioning costs for nuclear generating facilities in the financial statements. In response to these questions, the FASB has decided to review the accounting for obligations related to the retirement of long-lived assets, including nuclear decommissioning. Reference is made to MANAGEMENT'S DISCUSSION AND ANALYSIS - "Future Earnings Potential" of SOUTHERN, ALABAMA and GEORGIA in Item 7 and Note 1 to the financial statements of SOUTHERN, ALABAMA and GEORGIA under "Depreciation and Nuclear Decommissioning" in Item 8 of the Form 10-K. (D) SOUTHERN engages in price risk management activities. Reference is made to MANAGEMENT'S DISCUSSION AND ANALYSIS - "Derivative Financial Instruments" and Note 1 to the financial statements of SOUTHERN in Item 8 of the Form 10-K for a discussion of these activities. Activities for non-trading purposes consist of transactions to mitigate SOUTHERN's risk related to interest rate and foreign currency exchange rate fluctuations. At June 30, 2000, the status of outstanding non-trading related derivative contracts was as follows: 65 NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued)
Year of Maturity or Notional Unrecognized Type Termination Amount Gain (Loss) ---- ------------ ------ ----------- (in thousands) Interest rate swaps 2000-2012 $832,486 $1,884 2001-2012 (pound)600,000 $(46,230) 2002-2007 DM691,000 $1,048 Interest rate option 2000 $133,200 $36 Cross currency swaps 2001-2007 (pound)394,300 $27,080 Cross currency swaption 2003 DM435,000 $27,850 (pound) - Denotes British pounds sterling. DM - Denotes Deutschemark.
In January 1998, Southern Energy and Vastar Resources, Inc. combined their energy trading and marketing activities to form a joint venture. Southern Energy's 60% investment in the joint venture is accounted for under the equity method of accounting. SOUTHERN, Southern Energy and Vastar have made guarantees to certain counterparties regarding performance of contractual commitments by the joint venture. At June 30, 2000, outstanding guarantees related to the estimated fair value of net contractual commitments were approximately $278 million. SOUTHERN and Southern Energy have also made financial guarantees related to the joint venture as follows:
At June 30, 2000 (in millions) ---------------------------------------------------------------------------------------- Minimum payments to Vastar $ 85 Trade credit support (Notional amount) 825 Vastar gas purchase contract 128 ---------------------------------------------------------------------------------------- Reference is made to MANAGEMENT'S DISCUSSION AND ANALYSIS - "Future Earnings Potential" of SOUTHERN in Item 7 and Notes 1 and 5 to the financial statements of SOUTHERN under the captions "Financial Instruments for Trading Activities" and "Energy Trading and Marketing Commitments", respectively, in Item 8 of the Form 10-K. At June 30, 2000, Southern Energy also had a contingent commitment to buy the remaining 40% interest in the joint venture from Vastar for $210 million. On August 10, 2000 Southern Energy entered into a non-binding letter of intent to complete this acquisition for $250 million.
66 NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued) (E) SOUTHERN's principal business segment -- or its traditional business -- is the five integrated Southeast utilities that provide electric service in four states. The other reportable business segment is non-traditional energy services provided by Southern Energy, which develops and manages electricity and other energy-related projects both in the United States and abroad. Intersegment revenues are not material. Financial data for business segments for the periods covered in the Form 10-Q are as follows:
Integrated All Southeast Southern Other Reconciling Utilities Energy (Note) Eliminations Consolidated ------------ ---------- --------- ------------- --------------- (in millions) Three Months Ended June 30, 2000: Operating revenues $ 2,472 $ 673 $ 62 $ (12) $ 3,195 Segment net income (loss) 282 93 (34) 1 342 Six Months Ended June 30, 2000: Operating revenues 4,477 1,194 119 (22) 5,768 Segment net income (loss) 458 194 (64) (1) 587 Total assets at June 30, 2000 26,015 14,308 520 (1,322) 39,521 ----------------------------------------- ------------ ---------- --------- ------------- --------------- Three Months Ended June 30, 1999: Operating revenues $ 2,243 $ 503 $ 55 $ (10) $ 2,791 Segment net income (loss) 264 77 (11) (16) 314 Six Months Ended June 30, 1999: Operating revenues 4,125 1,025 97 (14) 5,233 Segment net income (loss) 432 165 (44) (15) 538 Total assets at December 31, 1999 25,251 13,872 455 (1,189) 38,389 ------------------------------------------ ----------- ---------- --------- ------------- ----------------
(Note) The all other category includes parent SOUTHERN, which does not allocate operating expenses to business segments. Also, this category includes segments below the quantitative threshold for separate disclosure. These segments include a wireless communication company and a developmental company for energy products and services. Amounts for Southern Energy exclude interest expense to parent SOUTHERN. (F) Reference is made to Note 3 to the financial statements of SOUTHERN and ALABAMA in Item 8 of the Form 10-K for information relating to retail rate adjustment procedures. (G) Reference is made to Note 3 to the financial statements of SOUTHERN and ALABAMA in Item 8 of the Form 10-K for information relating to a judgment against ALABAMA arising from discharges into Lake Martin. On August 4, 2000, the Supreme Court of Alabama reversed the judgment against ALABAMA and the other defendants, and rendered a judgment in favor of all defendants. 67 NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued) (H) Reference is made to Note 3 to the financial statements of SOUTHERN and GEORGIA in Item 8 of the Form 10-K for information concerning a three-year rate order approved by the Georgia PSC effective January 1, 1999. The order decreased annual retail rates by $262 million effective January 1, 1999 and by an additional $24 million effective January 1, 2000. The order further provides for $85 million each year, plus up to $50 million annually of any earnings above a 12.5% retail return on common equity during the second and third years, to be applied to accelerated amortization or depreciation of assets. In May 2000, the Georgia PSC ordered that these funds be maintained in a regulatory liability account instead of being applied to premium on reacquired debt as proposed by GEORGIA. Two-thirds of any additional earnings above the 12.5% return will be applied to rate reductions and the remaining one-third retained by GEORGIA. Pursuant to this provision, GEORGIA recognized accelerated amortization of $51 million in the second quarter and $88 million year-to-date 2000 and $21 million in the second quarter and $43 million year-to-date 1999. (I) Reference is made to Note 3 to the financial statements of SOUTHERN and GEORGIA in Item 8 of the Form 10-K for information regarding GEORGIA's designation as a potentially responsible party under the Comprehensive Environmental Response, Compensation and Liability Act and other environmental contingencies. (J) In April 2000, MISSISSIPPI reached an agreement with certain of its wholesale customers to reduce its rates effective January 1, 2000. The agreement results in an annual rate reduction of approximately $3 million and a temporary annualized rate reduction of approximately $3 million for a period of 18 months ending June 30, 2001. In anticipation of FERC approval, MISSISSIPPI has accumulated a liability for approximately $3 million in revenues subject to refund for the six months ended June 30, 2000. In addition, MISSISSIPPI and its customers agreed that neither party would seek a unilateral change to the new rates prior to January 1, 2002, except for changes due to the operation of the fuel cost adjustment clause under the tariff. In July 2000, the FERC accepted MISSISSIPPI's settlement with its customers as filed. (K) In 1998, the Georgia PSC approved a new accounting order for SAVANNAH. Under this order, SAVANNAH will reduce electric rates to its small business customers, expense additional storm damage accruals and accrue additional depreciation on generating assets. For additional information concerning the four-year accounting order approved by the Georgia PSC in June 1998, reference is made to Note 3 to the financial statements of SAVANNAH in Item 8 of the Form 10-K. (L) Reference is made to Note 3 to the financial statements of SOUTHERN in Item 8 and to Legal Proceedings in Item 3 of the Form 10-K for information relating to (i) petitions for Chapter 11 bankruptcy relief which were filed in the U. S. Bankruptcy Court for the Southern District of Alabama and (ii) proposed settlement discussions among the affected parties. At June 30, 2000, Mobile Energy had total assets of $392 million and senior debt outstanding of $190 million of first mortgage bonds and $72 million related to tax-exempt bonds. In connection with the bond financings, SOUTHERN provided certain limited guarantees, in lieu of funding debt service and maintenance reserve accounts with cash. As of June 30, 2000, under an agreement with the bondholders, SOUTHERN had paid $38.3 million pursuant to the guarantees. SOUTHERN continues to have guarantees outstanding of certain potential environmental and other obligations of Mobile Energy that represent a maximum contingent liability of $21 million at June 30, 2000. The final outcome of this matter cannot now be determined. On August 4, 2000, Mobile Energy and its immediate parent, Mobile Energy Services Holdings, Inc., filed a joint proposed plan of 68 NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued) reorganization with the bankruptcy court. If approved as proposed, that plan would result in a termination of SOUTHERN's direct and indirect ownership interests in both entities. That proposed plan of reorganization, however, would not affect SOUTHERN's ongoing guarantee obligations related to Mobile Energy that are described above. (M) In April 1999, SOUTHERN's board approved the repurchase of up to 50 million shares of SOUTHERN's common stock over the next two years through open market or privately negotiated transactions. The repurchase program was completed during the first quarter 2000. (N) On April 17, 2000, SOUTHERN announced that its board of directors approved an initial public offering of up to 19.9 percent of its Southern Energy subsidiary. SOUTHERN also announced that it is planning to spin-off to holders of SOUTHERN common stock the remaining ownership of Southern Energy within 12 months of the initial public offering. The spin-off will be subject to a number of market and other conditions. Reference is made to SOUTHERN's Current Report on Form 8-K dated April 17, 2000 for additional information. On April 21, 2000, Southern Energy filed a registration statement with the SEC for the initial public offering of Southern Energy shares. Southern Energy filed an amendment to such registration statement on July 18, 2000. The offering is expected to take place as soon as practicable after the effective date of the registration statement. (O) Reference is made to Note 3 to the financial statements of SOUTHERN, ALABAMA , GEORGIA, GULF, MISSISSIPPI and SAVANNAH in Item 8 of the Form 10-K for information on EPA litigation. On August 1, 2000, the U.S. District Court granted ALABAMA's motion to dismiss for lack of jurisdiction in Georgia, and granted SCS's motion to dismiss on the grounds that it neither owned nor operated the generating units involved in the proceedings. (P) Southern Energy has two significant power sales agreements with the Philippine National Power Corporation ("NPC") that are supported by a sovereign guarantee by the Philippines' government. For the year ended December 31, 1999, and the six months ended June 30, 2000, approximately 8% and 17.5%, respectively, of SOUTHERN's net income was derived from these agreements. If these agreements were terminated, it could have a material adverse effect on the future operating results and liquidity of SOUTHERN and Southern Energy. (Q) In March 2000, an administrative law judge ("ALJ") held hearings in connection with a FERC proceeding to determine the percentage of a settled $158.8 million revenue requirement for the period from June 1, 1999 through December 31, 2001 to be paid to Southern Energy California, L.L.C. and its subsidiaries (collectively, "SE California") under reliability must-run agreements between SE California and the California Independent System Operator ("CAISO"). SE California had proposed to allocate approximately 75% of the responsibility for payment of the revenue requirement to the CAISO, while CAISO and other aligned parties argued that CAISO should pay no more than approximately 7%. On June 7, 2000, the ALJ presiding over this FERC proceeding issued an initial decision allocating 3% of the responsibility for payment to the CAISO and the remaining 97% to SE California. On July 7, 2000, SE California filed an appeal of the ALJ's initial decision with the FERC. The outcome of this appeal is uncertain. A final FERC order in this proceeding may be appealed to the U.S. Court of Appeals. If SE California is ultimately unsuccessful in its appeal of the ALJ's decision, SE California will be required to refund certain amounts of the revenue requirement billed to the CAISO for the period from June 1, 1999 69 NOTES TO THE CONDENSED FINANCIAL STATEMENTS: (Continued) until the final disposition of the appeal. The amount of this refund as of June 30, 2000 would have been approximately $94 million and would have reduced net income by approximately $33 million. These amounts do not include interest that would be payable in the event of a refund. If SE California is unsuccessful in its appeal, it plans to pursue other options available under the reliability must-run agreements to mitigate the impact of the ALJ's decision upon its future operations. (R) On February 21, 2000, Southern Energy executed a stock purchase agreement with The AES Corporation to sell its interest in Alicura for a total consideration of $205 million including the assumption of debt. The closing was expected to occur on June 28, 2000; however, it has not yet occurred. There can be no assurance that this transaction will be consummated. 70 PART II - OTHER INFORMATION Item 1. Legal Proceedings. (1) Cooper et al.vs. GEORGIA, SOUTHERN and SCS (Superior Court of Fulton County, Georgia) On July 28, 2000, a lawsuit alleging race discrimination was filed by three GEORGIA employees against GEORGIA, SOUTHERN and SCS. The lawsuit also raised claims on behalf of a purported class. The plaintiffs seek compensatory and punitive damages in an unspecified amount, as well as injunctive relief. The final outcome of this case cannot now be determined. (2) Reference is made to the Notes to the Condensed Financial Statements herein for information regarding certain legal and administrative proceedings in which SOUTHERN and its reporting subsidiaries are involved. Item 4. Submission of Matters to a Vote of Security Holders. SOUTHERN SOUTHERN held its annual meeting of stockholders on May 24, 2000. Each nominee for director of SOUTHERN received the requisite plurality of votes. The vote tabulation was as follows: Nominees Shares For Shares Withhold Vote Dorrit J. Bern 464,687,888 9,174,789 Thomas J. Chapman 464,486,349 9,376,328 A. D. Correll 465,357,341 8,505,337 A. W. Dahlberg 464,916,299 8,946,378 H. Allen Franklin 465,275,068 8,587,609 Bruce S. Gordon 465,206,728 8,655,950 L. G. Hardman III 465,344,771 8,517,907 Elmer B. Harris 465,005,528 8,857,149 Donald M. James 465,155,555 8,707,123 David J. Lesar 465,898,084 8,964,594 Zack T. Pate 465,351,532 8,511,146 Gerald J. St. Pe 465,348,609 8,514,069 71 Item 4. Submission of Matters to a Vote of Security Holders.(Continued) ALABAMA ALABAMA held its annual common stockholders meeting on April 28, 2000, and the following persons were elected to serve as directors of ALABAMA: Whit Armstrong Thomas C. Meredith David J. Cooper Mayer Mitchell H. Allen Franklin William V. Muse Elmer B. Harris John T. Porter R. Kent Henslee Robert D. Powers Carl E. Jones, Jr. Andreas Renschler Patricia M. King C. Dowd Ritter James K. Lowder James H. Sanford Wallace D. Malone, Jr. John Cox Webb, IV All of the 5,608,955 outstanding shares of ALABAMA's common stock are owned by SOUTHERN and were voted for the election of such directors. GEORGIA By written consent, in lieu of the annual meeting of stockholders of GEORGIA, effective May 17, 2000, the following persons were elected to serve as directors of GEORGIA: Daniel P. Amos Zell Miller * Juanita P. Baranco G. Joseph Prendergast William A. Fickling, Jr. David M. Ratcliffe H. Allen Franklin Herman J. Russell L. G. Hardman III William Jerry Vereen James R. Lientz, Jr. Carl Ware * Zell Miller resigned effective July 25, 2000. All of the 7,761,500 outstanding shares of GEORGIA's common stock are owned by SOUTHERN and were voted for the election of such directors. GULF By written consent, in lieu of the annual meeting of stockholders of GULF, effective June 27, 2000, the following persons were elected to serve as directors of GULF: Travis J. Bowden W. Deck Hull, Jr. Fred C. Donovan Joseph K. Tannehill H. Allen Franklin Barbara H. Thames All of the 992,717 outstanding shares of GULF's common stock are owned by SOUTHERN and were voted for the election of such directors. 72 Item 4. Submission of Matters to a Vote of Security Holders.(Continued) MISSISSIPPI MISSISSIPPI held its annual stockholders meeting on April 4, 2000, and the following persons were elected to serve as directors of MISSISSIPPI: Edwin E. Downer Malcolm Portera Dwight H. Evans George A. Schloegel Robert S. Gaddis Philip J. Terrell Linda T. Howard N. Eugene Warr Aubrey K. Lucas All of the 1,121,000 outstanding shares of MISSISSIPPI's common stock are owned by SOUTHERN and were voted for the election of such directors. SAVANNAH SAVANNAH held its annual stockholders meeting on May 17, 2000, and the following persons were elected to serve as directors of SAVANNAH: Gus H. Bell, III G. Edison Holland, Jr. Archie H. Davis Robert B. Miller, III Walter D. Gnann Arnold M. Tenenbaum All of the 10,844,635 outstanding shares of SAVANNAH's common stock are owned by SOUTHERN and were voted for the election of such directors. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits. -------- Exhibits 3 - (d)2 By-laws of GULF as amended effective July 28, 2000, and as presently in effect. (f)2 By-laws of SAVANNAH as amended effective May 27, 2000, and as presently in effect. Exhibits 15 - Letter re: unaudited interim financial information (a) ALABAMA (b) GEORGIA Exhibit 24 - (a) Powers of Attorney and resolutions. (Designated in the Form 10-K for the year ended December 31, 1999, File Nos. 1-3526, 1-3164, 1-6468, 0-2429, 0-6849 and 1-5072 as Exhibits 24(a),24(b), 24(c), 24(d), 24(e) and 24(f), respectively, and incorporated herein by reference.) 73 Item 6. Exhibits and Reports on Form 8-K. (Continued) Exhibits 27 - Financial Data Schedule (a) SOUTHERN (b) ALABAMA (c) GEORGIA (d) GULF (e) MISSISSIPPI (f) SAVANNAH (b) Reports on Form 8-K. ------------------- ALABAMA filed a Current Report on Form 8-K dated May 11, 2000: Items reported: Items 5 and 7 Financial statements filed: None SOUTHERN filed Current Reports on Form 8-K dated April 17, 2000 and June 8, 2000: Items reported: Items 5 and 7 Financial statements filed: None SOUTHERN filed a Current Report on Form 8-K dated June 7, 2000: Items reported: Item 5 Financial statements filed: None 74 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof. THE SOUTHERN COMPANY By A. W. Dahlberg Chairman and Chief Executive Officer (Principal Executive Officer) By W. L. Westbrook Financial Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) By /s/ Wayne Boston (Wayne Boston, Attorney-in-fact) Date: August 11, 2000 - ------------------------------------------------------------------------------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof. ALABAMA POWER COMPANY By Elmer B. Harris President and Chief Executive Officer (Principal Executive Officer) By William B. Hutchins, III Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer) By /s/ Wayne Boston (Wayne Boston, Attorney-in-fact) Date: August 11, 2000 75 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof. GEORGIA POWER COMPANY By David M. Ratcliffe President and Chief Executive Officer (Principal Executive Officer) By Thomas A. Fanning Executive Vice President, Treasurer and Chief Financial Officer (Principal Financial Officer) By /s/ Wayne Boston (Wayne Boston, Attorney-in-fact) Date: August 11, 2000 - ------------------------------------------------------------------------------ Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof. GULF POWER COMPANY By Travis J. Bowden President and Chief Executive Officer (Principal Executive Officer) By Ronnie Labrato Comptroller and Chief Financial Officer (Principal Financial and Accounting Officer) By /s/ Wayne Boston (Wayne Boston, Attorney-in-fact) Date: August 11, 2000 76 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof. MISSISSIPPI POWER COMPANY By Dwight H. Evans President and Chief Executive Officer (Principal Executive Officer) By Michael W. Southern Vice President, Secretary, Treasurer and Chief Financial Officer (Principal Financial and Accounting Officer) By /s/ Wayne Boston (Wayne Boston, Attorney-in-fact) Date: August 11, 2000 - ------------------------------------------------------------------------------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof. SAVANNAH ELECTRIC AND POWER COMPANY By G. Edison Holland, Jr. President and Chief Executive Officer (Principal Executive Officer) By Kirby R. Willis Vice President, Treasurer and Chief Financial Officer (Principal Financial and Accounting Officer) By /s/ Wayne Boston (Wayne Boston, Attorney-in-fact) Date: August 11, 2000 77 EX-3.A 2 0002.txt GULF AMENDED BY-LAWS Exhibit 3 (d)2 GULF POWER COMPANY BY-LAWS Section 1. The annual meeting of the stockholders of the corporation for the election of directors and for the transaction of such other corporate business as may properly come before such meeting shall be held at the corporation's office at Augusta, in the State of Maine, or at such other place within or without the State of Maine as the Board of Directors may determine, on the last Tuesday in June in each year; provided, however, that the Board of Directors may fix an earlier day for such annual meeting of stockholders in any particular year; and provided further that, if the day fixed for such annual meeting of stockholders is a legal holiday, such meeting shall be held on the first day thereafter which is not a legal holiday. Section 2. Special meetings of the stockholders of the corporation may be held at such time and at such place within or without the State of Maine as may be determined by the President or the Board of Directors or Executive Committee, or stockholders holding one-fourth of the then outstanding capital stock entitled to vote. Section 3. Notice of the time, place and purpose of every meeting of stockholders shall be mailed by the Secretary or the officer performing his duties at least ten days before the meeting to each stockholder of record entitled to vote, at his post office address as shown by the records of the corporation, but meetings may be held without notice if all stockholders entitled to vote are present or if notice is waived before or after the meeting by those not present. No stockholder shall be entitled to notice of any meeting of stockholders with respect to any shares registered in his name after the date upon which notice of such meeting is required by law or by these by-laws to have been mailed or otherwise given to stockholders. Section 4. Subject to the provisions of the articles of incorporation, as amended, the holders of a majority of the stock of the corporation entitled to vote, present in person or by proxy, shall constitute a quorum, but less than a quorum shall have power to adjourn. At all meetings of stockholders, each stockholder entitled to vote may vote and otherwise act either in person or by proxy. Section 5. The stock of the corporation shall be transferable or assignable on the books of the corporation by the holders in person or by attorney on the surrender of the certificates therefor duly endorsed. The certificates of stock of the corporation shall be numbered and shall be entered in the books of the corporation and registered as they are issued. They shall exhibit the name of the registered holder and shall certify the number of shares owned by him and shall be signed by, or in the name of the corporation by, the President or a Vice-President and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary, and shall be sealed with the corporate seal of the corporation. Where such certificate is signed by a Transfer Agent or by a Transfer Clerk acting on behalf of the corporation and by a Registrar, the signature of any such President, Vice-President, Treasurer, Assistant Treasurer, Secretary or Assistant Secretary and the seal of the corporation may be facsimile. In case any officer or officers who shall have signed, or whose facsimile signature or signatures shall have been used on, any such certificate or certificates, shall cease to be such officer or officers of the corporation, whether because of death, resignation or otherwise, before such certificate or certificates shall have been delivered by the corporation, such certificate or certificates may nevertheless be adopted by the corporation and be issued and delivered as though the person or persons who signed such certificate or certificates or whose facsimile signature or signatures shall have been used thereon had not ceased to be such officer or officers of the corporation and the issuance and delivery of any such certificate or certificates shall be conclusive evidence of such adoption. The stock transfer books of the corporation may be closed by order of the Board of Directors for such period, not to exceed sixty days previous to any meeting of the stockholders or previous to the payment of any dividend upon the stock of the corporation, as the Board may determine, during which time no transfer of stock upon the books of the Corporation shall be made, and said books shall be re-opened the day following the date fixed for such meeting or for the payment of such dividend. If the stock transfer books of the corporation are ordered closed by the Board of Directors, every stockholder who appears of record at the time of closing said books shall be entitled to vote at the meeting or to receive the dividend on account of which the said books were ordered closed. In lieu of providing for the closing of the stock transfer books of the corporation, the Board of Directors may fix a date not exceeding sixty days preceding the date of any meeting of stockholders, or any dividend payment date, as the record date for the determination of the stockholders entitled to notice of and to vote at such meeting, or entitled to receive such dividend, as the case may be. If the stock transfer books of the corporation are not ordered closed by the Board of Directors or if the Board of Directors does not fix a date of record in lieu thereof, every stockholder who appears of record on the date of a stockholders' meeting shall be entitled to vote at such meeting and every stockholder who appears of record on the date specified by the Board of Directors in their declaration of a dividend shall be entitled to such dividend. Section 6. Upon receipt by this corporation of evidence, satisfactory to the Board of Directors, of the loss, destruction or mutilation of any certificate of stock of this corporation and, if required by the Board of Directors, upon receipt of indemnity satisfactory to the Board of Directors and upon surrender and cancellation of such certificate, if mutilated, the Board of Directors may, if it so determines, direct the officers of this corporation to execute and deliver a new certificate of like tenor and for the same number of shares of the same class of stock to be issued in lieu of such lost, destroyed or mutilated certificate. Section 7. The affairs of this corporation shall be managed by a Board consisting of not less than six directors, nor more than fifteen directors, their number to be fixed at the annual or any special meeting of the stockholders, who shall be elected annually by the stockholders entitled to vote, to hold office until their successors are elected and qualify. Directors need not be stockholders. A majority of the members of the Board then in office shall constitute a quorum. Vacancies in the Board of Directors may be filled by the Board at any meeting, except that vacancies arising from the election of fewer directors than the total number fixed shall be filled at a meeting of the stockholders called for the purpose of filling such vacancies, or by the Board of Directors under special authorization from the stockholders. Any and all of the directors may at any time be removed without cause assigned by the vote of the holders of a majority in number of all of the outstanding stock entitled to vote given at a meeting called for the purpose of considering such action. The foregoing provisions of this Section 7 relating to the election of directors and to the filling of vacancies in the Board of Directors shall be subject to the provisions of the Articles of Incorporation, as amended. A person being a full-time executive employee of the corporation or its parent company or any affiliated company when first elected a director of the corporation (hereinafter sometimes referred to as an "employee-director") shall not be eligible for election as a director when he ceases to be an executive employee, whether by reason of resignation, retirement or other cause. Any employee-director shall resign as a director effective on the date he ceases to be an executive employee. A person not an employee-director shall not be eligible to serve as a director of the corporation (1) after his 70th birthday, (2) one year after permanent separation from the business or professional organization with which he was primarily associated when first elected a director, (3) one year after any other material change in his primary occupation or executive position from that which he pursued or held when first elected a director, or (4) one year after moving his principal residence outside the service area in which he was a resident when first elected a director, whichever event first occurs. The application to an individual of any provision of this paragraph may be waived by the Board of Directors. Any such waiver shall only be effective on a year-to-year basis. The provisions of this paragraph, with the exception of item (1) above, shall apply only to those individuals elected as a member of the Board of Directors after the annual meeting of this Board held July 26, 1996. Any employee-director who is not eligible for election as a director by reason of the foregoing provisions shall be eligible for election and re-election by the Board of Directors as an advisory director, upon the recommendation of the Chief Executive Officer of the corporation, for a term ending at the first meeting of the Board of Directors following the annual meeting of stockholders next following such election. Any person eligible for election as an advisory director must be one whose services as such will be, in the opinion of the Board of Directors, of value to the corporation. An advisory director shall be entitled to notice of and to attend and advise but not to vote at, meetings of the Board of Directors, and of any committees thereof to which he shall be appointed, nor shall he be counted in determining the existence of a quorum, and for his services may be paid, in the discretion of the Board of Directors, compensation and reimbursement of expenses on the same basis as if he were a director. Section 8. The annual meeting of the Board of Directors shall be held as soon as practicable after the annual meeting of the stockholders. Other meetings of the Board of Directors shall be held at the times fixed by resolution of the Board or upon call of the Chairman of the Board, the President or a Vice-President or any person upon whom powers have devolved pursuant to Section 12 hereof. The Secretary or officer performing his duties shall give at least two days' notice of all meetings of Directors, provided that a meeting may be held without notice immediately after the annual election of Directors, and notice need not be given of regular meetings held at times fixed by resolution of the Board. Meetings may be held at any time without notice if all the Directors are present or if those not present waive notice either before or after the meeting. Notice by mail or telegraph to the usual business or residence address of the director shall be sufficient. The purpose of special meetings of the Board of Directors need not be stated in such notice unless required by law and unless otherwise indicated in the notice any and all business may be transacted at a special meeting of the Board of Directors. Section 9. The Board of Directors, as soon as may be convenient after the election of directors in each year, may appoint one of their number Chairman of the Board and shall appoint one of their number President of the corporation, and shall also appoint one or more Vice-presidents, a Secretary, a Clerk and a Treasurer, none of whom need be members of the Board, and shall, from time to time, appoint such other officers as they may deem proper. The same person may be appointed to more than one office. The term of office of all officers shall be for one year and until their respective successors are chosen and qualified, but any officer may be removed from office at any time by the Board of Directors without cause assigned. Vacancies in the offices shall be filled by the Board of Directors. Section 10. The Board of Directors, as soon as may be after the election in each year, may appoint an executive committee to consist of the President and such number of directors as the Board may from time to time determine. Such committee shall have and may exercise all of the powers of the Board during the intervals between its meetings which may be lawfully delegated, subject to such limitations as may be provided by a resolution of the Board. The Board shall have the power at any time to change the membership of such committee and to fill vacancies in it. The executive committee may make rules for the conduct of its business and may appoint such committees and assistants as it may deem necessary. The Board may, from time to time, determine by resolution the number of members of such committee required to constitute a quorum. The Board shall designate the Chairman of the executive committee and the proceedings of the executive committee shall from time to time be reported to the Board of Directors. Section 11. Unless otherwise designated as separate offices by the Board of Directors, the President shall be the Chief Executive Officer of the corporation; he shall preside at all meetings of the stockholders and directors; he shall have general supervision of the business of the corporation; shall see that all orders and resolutions of the Board are carried into effect, subject, however, to the rights of the directors to delegate any specific powers, except such as may be by statute exclusively conferred on the President, to any other officer of the corporation. He shall, unless otherwise ordered, execute bonds, deeds, mortgages, and other contracts, and when required shall cause the seal of the corporation to be affixed thereto and shall sign certificates of stock. He shall be ex officio a member of all standing committees, and shall submit to the stockholders at their annual meeting a report of the year's business. Should the offices of President and Chief Executive Officer be held by different persons, the above duties shall be as delegated to each office by the Board of Directors. Section 12. Notwithstanding the provisions of Section 9 hereof, in the event of the absence or inability of the President to act, the powers and duties of the President shall, subject to the control of the Board of Directors, devolve successively upon such other persons as shall have been designated in a resolution adopted by the Board of Directors, and in accordance with the order of succession set forth therein. Section 13. The Secretary shall attend all sessions of the Board and record all votes and the minutes of all proceedings in a book to be kept for that purpose; and shall perform like duties for standing committees when required. He shall give or cause to be given notice of all meetings of the stockholders and the Board of Directors, and of standing committees when required, and shall perform such other duties as may be prescribed by the Board of Directors or the President under whose supervision he shall act. He shall keep in safe custody the seal of the Corporation, and when authorized, affix the same to any instrument requiring a seal, and attest the signatures thereof, when directed or required to do so. Section 14. The Treasurer shall have the custody of the corporate funds and securities, and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation, and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation, in such depositaries as may be designated by the Board of Directors. He shall disburse the funds of the corporation as may be ordered by the Board, taking proper vouchers for such disbursements, and shall render to the President, and to the directors at the regular meetings of the Board or whenever they may require it, an account of all his transactions as Treasurer and of the financial condition of the corporation. He shall give the corporation a bond for the faithful performance of the duties of his office, and for the restoration to the corporation in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind, in his possession or under his control belonging to the corporation. Section 15. It shall be the duty of the Comptroller to supervise and be responsible for accounting transactions of the corporation; to have charge of the installation and supervision of all accounting and statistical records, the preparation of all financial and statistical statements and reports, and the accounting methods, systems and forms in use by all departments; he shall perform such other duties as may be assigned to him from time to time by the President. Section 16. One or more Assistant Secretaries or Assistant Treasurers or Assistant Comptrollers may be elected by the Board or appointed by the President to hold office until the next annual meeting of the Board of Directors and until their successors are elected or appointed, but may be removed at any time. They shall perform any or all of the duties of the Secretary or Treasurer, or Comptroller as the case may be, and such other duties as may be assigned to them from time to time. Section 17. The Clerk of the corporation shall be a resident of Maine, and shall be sworn to the faithful performance of his duties. He need not be a stockholder. He shall keep a full and accurate record of all stockholders' meetings, shall keep an office in said Augusta as required by law, and shall have the custody of all books and papers belonging to the corporation which are located in said office. He shall receive as compensation for his services in acting as proxy at annual meetings, keeping an office in Maine, preparing records of annual meetings and furnishing the Secretary with duplicate copies of same and of necessary blanks and forms at proper times the sum of fifty dollars annually, payable in advance. He shall receive a reasonable compensation for all additional services. In the absence of the Clerk, a Clerk pro tempore may be chosen, who shall be a resident of Maine, and shall be duly sworn. Section 18. In the case of the absence of any officer of the corporation, or for any other reason that the Board may deem sufficient, the Board may delegate the powers or duties of such officers to any other officer or to any director, for the time being. Section 19. If the office of any director becomes vacant by reason of death, resignation, retirement, disqualification, removal from office, or otherwise, the remaining directors then in office, even though less than a quorum, by a majority vote may choose a successor or successors, who shall hold office for the unexpired term in respect of which such vacancy occurred; but vacancies in the Board of Directors arising from the election of fewer directors than the total number fixed shall be filled in the manner prescribed by Section 7 thereof. Section 20. The Board of Directors shall have power to authorize the payment of compensation to the directors for services to the corporation, including fees for attendance at meetings of the Board of Directors, of the executive committee and all other committees and to determine the amount of such compensation and fees. Section 21. A. Indemnity To the fullest extent permitted by law, the Company shall indemnify each person made, or threatened to be made, a party to any threatened, pending, or completed claim, action, suit or proceeding, whether civil or criminal, administrative or investigative, and whether by or in the right of the Company or otherwise, by reason of the fact that such person, or such person's testator or intestate, is or was a director, officer or was an employee of the Company holding one or more management positions through and inclusive of managers (but not positions below the level of managers) (such positions being hereinafter referred to as "Management Positions") or is or was serving at the request of the Company as a director, officer, employee, agent or trustee of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, in any capacity at the request of the Company, against all loss and expense actually or reasonably incurred by him including, without limiting the generality of the foregoing, judgments, fines, penalties, liabilities, sanctions, and amounts paid in settlement and attorneys fees and disbursements actually and necessarily incurred by him in defense of such action or proceeding, or any appeal therefrom. The indemnification provided by this Section shall inure to the benefit of the heirs, executors and administrators of such person. In any case in which a director, officer of the Company or employee of the Company holding one or more Management Positions requests indemnification with respect to the defense of any such claim, action, suit or proceedings, the Company may advance expenses (including attorney's fees) incurred by such person prior to the final disposition of such claim, action, suit or proceeding, as authorized by the Board of Directors in the specific case, upon receipt of a written undertaking by or on behalf of such person to repay amounts advanced if it shall ultimately be determined that such person was not entitled to be indemnified by the Company under this Section or otherwise; provided, however, that the advancement of such expenses shall not be deemed to be indemnification unless and until it shall ultimately be determined that such person is entitled to be indemnified by the Company. Such a person claiming indemnification shall be entitled to indemnification upon a determination that no judgment or other final adjudication adverse to such person has established that such person's acts were committed in bad faith or were the result of active and deliberate dishonesty and were material to the cause of action so adjudicated, or such person personally obtained an economic benefit including a financial profit or other advantage to which such person was not legally entitled. Without limiting the generality of the foregoing provision, no former, present or future director or officer of the Company or employee of the Company holding one or more management positions, or his heirs, executors or administrators, shall be liable for any undertaking entered into by the Company or its subsidiaries or affiliates as required by the Securities and Exchange Commission pursuant to any rule or regulation of the Securities and Exchange Commission now or hereafter in effect or orders issued pursuant to the Public Utility Holding Company Act of 1935, the Federal Power Act, or any undertaking entered into by the Company due to environmental requirements including all legally enforceable environmental compliance obligations imposed by federal, state or local statute, regulation, permit, judicial or administrative decree, order and judgment or other similar means, or any undertaking entered into by the Company pursuant to any approved Company compliance plan or any federal or state or municipal ordinance which directly or indirectly regulates the Company, or its parent by reason of their being holding or investment companies, public utility companies, public utility holding companies or subsidiaries of public utility holding companies. The foregoing rights shall not be exclusive of any other rights to which any such director, officer or employee may otherwise be entitled and shall be available whether or not the director, officer or employee continues to be a director, officer or employee at the time of incurring any such expenses and liabilities. If any word, clause or provision of the By-laws or any indemnification made under this Section 21 shall for any reason be determined to be invalid, the remaining provisions of the By-Laws shall not otherwise be affected thereby but shall remain in full force and effect. The masculine pronoun, as used in the By-Laws, means the masculine and feminine wherever applicable. B. Insurance The Company may purchase and maintain insurance on behalf of any person described in Section 21 against any liability or expense (including attorney fees) which may be asserted against such person whether or not the Company would have the power to indemnify such person against such liability or expense under this Section 21 or otherwise. Section 22. The Board of Directors are authorized to select such depositaries as they shall deem proper for the funds of the corporation. All checks and drafts against such deposited funds shall be signed by such officers or such other persons as may be specified by the Board of Directors. Section 23. The corporate seal shall be circular in form, and shall have inscribed thereon the name of the corporation, followed by the word "Maine" and shall have the word "Seal" inscribed in the center thereof. Section 24. A director of this corporation shall not be disqualified by his office from dealing or contracting with the corporation, either as vendor, purchaser or otherwise, nor shall any transaction or contract of this corporation be void or voidable by reason of the fact that any director or any firm of which any director is a member or any corporation of which any director is a shareholder or director is in any way interested in such transaction or shall be authorized, ratified or approved either (a) by vote of a majority of a quorum of the Board of Directors or the executive committee, without counting in such majority or quorum any directors so interested or being a member of a firm so interested or a shareholder or director of a corporation so interested, or (b) by vote at a stockholders' meeting of the holders of a majority of all the outstanding shares of the stock of the corporation entitled to vote or by a writing or writings signed by a majority of such holders; nor shall any director be liable to account to the corporation for any profit realized by him from or through any transaction or contract of this corporation authorized, ratified or approved as aforesaid, by reason of the fact that he or any firm of which he is a member or any corporation of which he is a shareholder or director was interested in such transaction or contract. Nothing herein contained shall create any liability in the events above described or prevent the authorization, ratification or approval of such contracts or transactions in any other manner provided by law. Section 25. These by-laws may be altered or amended (a) by a majority vote of the outstanding stock entitled to vote at any annual meeting or upon notice at any special meeting of stockholders, or (b) at any meeting of the Board of Directors by a majority vote of the entire Board then in office. EX-3.B 3 0003.txt SAVANNAH AMENDED BY-LAWS Exhibit 3 (f)2 ------------------------------------------------- BY LAWS of Savannah Electric and Power Company ------------------------------------------------- as Amended to May 17, 2000 ------------------------------------- BYLAWS of Savannah Electric and Power Company ------------------------------------- ARTICLE I Name The name of this Corporation shall be Savannah Electric and Power Company. ARTICLE II Stockholders' Meeting All meetings of the Stockholders shall be held at the principal office of the Corporation in Savannah, Georgia, unless some other place in Georgia is stated in the call. ARTICLE III Annual Meetings The annual meeting of the Stockholders of this Corporation shall be held on the third Tuesday in May in each year, if not a legal holiday, and if a legal holiday, then on the next succeeding Tuesday not a legal holiday. In the event that such annual meeting is omitted by oversight or otherwise on the date herein provided therefor, a subsequent meeting may be held in place thereof, and any business transacted or elections held at such meeting shall be as valid as if transacted or held at the annual meeting. Such subsequent meeting shall be called in the same manner and as provided for special Stockholders' meetings. ARTICLE IV Special Meetings Special meetings of the Stockholders of this Corporation shall be held whenever the Chairman of the Board, the President or a Vice President, a majority of the Board of Directors, or the holders of at least one-fourth (1/4) part in interest of the capital stock issued and outstanding and entitled to vote thereat shall make application therefor to the Secretary or an Assistant Secretary, stating the time, place and purpose of the meeting applied for. Special meetings of the Stockholders shall also be held following the accrual of the rights of the Preferred Stock of the Corporation, voting as a class, to elect the smallest number of Directors of this Corporation necessary to constitute a majority of the members of the Board of Directors, whenever required to be held in accordance with the provisions of the Charter of the Corporation and/or any resolution of the Stockholders setting forth the powers, preferences, etc. of the various classes of stock of the Corporation. ARTICLE V Notice of Stockholders' Meetings Notice of all Stockholders' meetings, stating the time and place, and, in the case of special meetings, the objects for which such meetings are called, shall be given by the Secretary or an Assistant Secretary, by mail, to each Stockholder of record entitled to vote at said meeting at his or her registered address, at least ten (10) days prior to the date of the meeting, and the person giving such notice shall make affidavit in relation thereto; provided that notice of any such meeting shall be deemed to be sufficiently given to any Stockholder who, while the provisions of the Trading with the Enemy Act (Public Act No. 91 of the Sixty-fifth Congress of the United States of America, as now or hereafter amended) shall be operative, shall appear from the stock books to be or shall be known to the Corporation to be an "enemy" or "ally of enemy" as defined in the said Act and whose address appearing on such stock books is outside the United States, or the mailing to whom of notice shall at the time be prohibited by any other law of the United States of America or by any executive order or regulation issued or promulgated by any officer or agency of the United States of America (a) if, at least ten (10) days prior to the date of the meeting, a copy of the notice of the meeting shall be mailed to any person or agency who by any such law, order or regulation shall have been duly designated to receive such notice or duly designated or appointed as custodian of the property of such Stockholder; or (b) if a brief notice of such meeting, including, in the case of a special meeting, either a brief statement of the objects for which such meeting is called or a statement as to where there may be obtained a copy of a written notice containing a statement of such objects, shall be published by the Corporation at least once, not less than ten (10) days before the meeting in a daily newspaper published in the English language and of general circulation in the City of Savannah, Georgia; provided further, however, that notice of any Stockholders' meeting stating that an increase of the stock or an issuance of bonds will be considered, shall be published in a daily newspaper published in the English language and of general circulation in the City of Savannah, Georgia, once a week for four weeks prior to the time of holding such meeting. Any meeting at which all the Stockholders are present, either in person or represented by proxy, or of which those not present in person have waived notice in writing, shall be a legal meeting for the transaction of business, notwithstanding that notice has not been given as hereinbefore provided. ARTICLE Vl Waiver of Notice Notice of any Stockholders' meeting may be waived by any Stockholder. ARTICLE VII Quorum At any meeting of the Stockholders a majority in interest of all the capital stock issued and outstanding and entitled to vote, represented by Stockholders of record in person or by proxy, shall constitute a quorum, but a less interest may adjourn any meeting from time to time, and the meeting may be held as adjourned without further notice. When a quorum is present at any meeting, a majority of the capital stock represented thereat shall decide any question brought before such meeting, unless the question is one upon which, by express provision of law or of the Charter of this Corporation or these Bylaws, a larger or different vote is required, in which case such express provision shall govern and control the decision of such question. The provisions of this Article are subject to the provisions of the Charter of the Company and/or any resolution of the Stockholders setting forth the powers, preferences, etc., of the various classes of stock of the Company. ARTICLE VIII Proxy and Voting Stockholders of record may vote at any meeting either in person or by proxy in writing, which shall be filed with the Secretary of the meeting before being voted. The voting powers of the respective classes of stock of the Company shall be as provided in the Charter of the Company and/or any resolution of the Stockholders setting forth the powers, preferences, etc., of the various classes of stock of the Company. ARTICLE IX Board of Directors A Board of not less than five nor more than fifteen Directors shall be chosen by ballot at the Annual Meeting of the Stockholders or at any meeting held in lieu thereof as hereinbefore provided. The number of Directors for each corporate year shall be fixed by vote at the meeting when elected, but the Stockholders may, at a special meeting called for the purpose during any such year, increase or decrease (within the limits above specified) the number of Directors as thus fixed and if necessary elect Directors to complete the number so fixed. A majority of the Directors shall be citizens and residents of Georgia. Each Director shall serve until the next Annual Meeting of the Stockholders and until his successor is duly elected and qualified. Directors need not be Stockholders of the Corporation. A non-employee Director shall become ineligible to serve as a Director (a) after his 70th birthday; (b) one year after permanent separation from the business or professional organization with which he was primarily associated when first elected as a Director; (c) one year after any other material change in his primary occupation or executive position from that which he pursued or held when first elected as a Director; or (d) one year after moving his principal residence outside the service area in which he was a resident when first elected a Director. The provisions of this paragraph shall apply to all such non-employee Directors regardless of the date of first election as a Director. The provisions of this Article are subject to the provisions of the Charter of the Company and/or any resolution of the Stockholders setting forth the powers, preferences, etc., of the various classes of Company. ARTICLE X Powers of Directors The Board of Directors shall have the entire management of the business of the Corporation. In the management and control of the property, business and affairs of the Corporation, the Board of Directors is hereby vested with all the powers possessed by the Corporation itself, so far as this delegation of authority is not inconsistent with the laws of the State of Georgia, with the Charter of the Corporation or with these Bylaws. The Board of Directors shall have power to determine what constitutes net earnings, profits and surplus, respectively, what amount shall be reserved for working capital and for any other purposes, and what amount shall be declared as dividends, and such determination by the Board of Directors shall be final and conclusive. ARTICLE XI Executive and Other Committees The Board of Directors may elect from their number an Executive Committee of not less than three or more than seven members, which Committee may exercise the powers of the Board of Directors in the management of the business of the Corporation when the Board is not in session. The Executive Committee shall report its action to the Board of Directors for approval. The Executive Committee may make rules for the holding and conduct of its meetings and the keeping of the records thereof. The Board of Directors may likewise elect or appoint from their number other committees from time to time, the number composing such committees and the powers conferred upon the same to be determined by vote of the Board of Directors. ARTICLE XII Meetings Regular meetings of the Board of Directors shall be held at such places and at such times as the Board may by vote from time to time determine, and if so determined no notice thereof need be given. Special meetings of the Board of Directors may be held at any time or place whenever called by the Chairman of the Board, the President, a Vice President, the Secretary, an Assistant Secretary, or five or more Directors, reasonable notice thereof being given to each Director by the Secretary or an Assistant Secretary or officer calling the meeting, or at any time without formal notice provided all the Directors are present, or those not present have waived notice thereof in writing. Such special meetings shall be held at such times and places as the notice thereof or waiver shall specify. ARTICLE XIII Quorum A majority of the total number of members of the Board of Directors as constituted for the time being, but not less than three, shall constitute a quorum for the transaction of business, but a less number may adjourn any meeting from time to time and the same may be held as adjourned without further notice. When a quorum is present at any meeting, a majority vote of the members in attendance thereat shall decide any questions brought before such meeting, except as otherwise provided by law, by the Charter of this Corporation or by these Bylaws. ARTICLE XIV Officers The officers of this Corporation shall be a Chairman of the Board, subject to Article XVII hereof, and a President, one or more Vice Presidents, a Secretary and a Treasurer. All officers shall be elected by the Board of Directors after its election by the Stockholders, and a regular meeting may be held without notice for this purpose immediately after the Annual Meeting of the Stockholders and at the same place. ARTICLE XV Additional Officers and Agents The Board of Directors at its discretion may appoint a General Manager, one or more Assistant Treasurers and one or more Assistant Secretaries, and such other officers or agents as it may deem advisable and prescribe the duties thereof. ARTICLE XVI Eligibility of Officers The Chairman of the Board, if any, and the President, shall each be a Director of the Corporation. The Vice Presidents, Secretary and Treasurer and such other officers as may be appointed may be but need not be Directors of the Corporation. The same person may hold the offices of Secretary and Treasurer. ARTICLE XVII Chairman of the Board The Corporation may, in the discretion of the Board of Directors, have a Chairman of the Board who, in such case, shall be the chief executive officer of the Corporation and, as such, shall have supervision of its policies, business, and affairs, and such other powers and duties as are commonly incident to the office of chief executive officer. He shall preside at the meetings of the Board of Directors and may call meetings of the Board of Directors and of any committee thereof, whenever he deems it necessary and he shall call to order and act as chairman of all meetings of the Stockholders of the Corporation. In addition, he shall have such other powers and duties as the Board of Directors shall designate from time to time. The Chairman of the Board, unless some other person is thereunto specifically authorized by vote of the Board of Directors, shall have power to sign all bonds, deeds and contracts of the Corporation. Should the Board of Directors determine not to have, or upon a vacancy occurring in such office fail to elect, a Chairman of the Board, such office shall cease to exist pending subsequent action by the Board of Directors recreating such office. ARTICLE XVIII President The President shall, subject to the supervision of the Chairman of the Board, have the direction of and responsibility for, the operations of the Corporation, and such other powers and duties as are commonly incident to that office. He shall also have such other powers and duties as the Board of Directors shall designate from time to time and, in the absence of the Chairman of the Board, or should such office fail to exist, shall have the powers and duties of the Chairman of the Board. The President or a Vice President, unless some other person is thereunto specifically authorized by vote of the Board of Directors, shall have power to sign all certificates of stock, bonds, deeds and contracts of the Corporation. ARTICLE XIX Vice Presidents A Vice President shall perform the duties and have the powers of the Chairman of the Board and the President during the absence or disability of the Chairman of the Board (or the nonexistence of said office) and the President and shall have power to sign all certificates of stock, bonds, deeds and contracts of the Corporation, and shall perform such other duties and have such other powers as the Board of Directors shall from time to time designate. ARTICLE XX Secretary The Secretary shall be present at all meetings of the Stockholders, of the Board of Directors and of the Executive Committee, and shall keep accurate records of the proceedings at such meetings in books provided for that purpose. He shall perform all the duties commonly incident to his office and shall perform such other duties and have such other powers as the Board of Directors shall from time to time designate. In the absence of the Secretary, an Assistant Secretary or a Secretary pro tempore shall perform his duties. The Secretary, Assistant Secretary or Secretary pro tempore shall be sworn. ARTICLE XXI Treasurer The Treasurer, subject to the order of the Board of Directors, shall have the care and custody of the money, funds, valuable papers and documents of the Corporation (other than his own bond, which shall be in the custody of the President), and shall have and exercise under the supervision of the Board of Directors, all the powers and duties commonly incident to his office, and shall give bond in such form and with such sureties as shall be required by the Board of Directors. He shall deposit all funds of the Corporation in such bank or banks, trust company or trust companies, or with such firm or firms doing a banking business as the Board of Directors shall designate. He may endorse for deposit or collection all checks, notes, et cetera, payable to the Corporation or to its order, may accept drafts on behalf of the Corporation, and shall, together with the President or a Vice President, sign all certificates of stock. He shall keep accurate books of account of the Corporation's transactions, which shall be the property of the Corporation, and, together with all its property in his possession, shall be subject at all times to the inspection and control of the Board of Directors. The Treasurer shall hold his office during the pleasure of the Board of Directors, and shall in every way be subject to their orders. All checks, notes, drafts or other obligations for the payment of money shall be signed by the Treasurer (except as the Board of Directors shall otherwise specifically order) and, with the exception of checks for the payment of not exceeding $10,000 (which require one signature) and notes, shall be countersigned as a condition to their validity by the Chairman of the Board or the President or such other officer or agent as the Board of Directors shall by resolution direct; notes shall be countersigned as a condition to their validity only by such officer or agent as the Board of Directors shall by resolution direct. Checks for the total amount of any payroll may be drawn in accordance with the foregoing provisions and deposited in a special fund. Checks upon this fund may be drawn by such person as the Treasurer shall designate, and need not be countersigned. The Directors may appoint one or more Assistant Treasurers with such powers and duties, including the powers and duties of the Treasurer as herein stated, as to them shall seem best. ARTICLE XXII Removals The Stockholders may, at any meeting called for the purpose, by vote of a majority of the capital stock issued and outstanding, remove any Director or other officer elected by them and elect his successor. The Board of Directors may, by vote of not less than a majority of the entire Board, remove from office any officer or agent elected or appointed by them. The provisions of this Article are subject to the provisions of the Charter of the Company and/or any resolution of the Stockholders setting forth the powers, preferences, etc., of the various classes of stock of the Company. ARTICLE XXIII Vacancies If the office of any Director or officer or agent, one or more, becomes vacant by reason of death, resignation, removal, disqualification or otherwise, the remaining Directors, although less than a quorum, may, by a majority vote, choose a successor or successors who shall hold office for the unexpired term, but vacancies in the Board of Directors may be filled for the unexpired term by the Stockholders at a meeting called for that purpose, unless such vacancy shall have been filled by the Directors. The provisions of this Article are subject to the provisions of the Charter of the Company and/or any resolution of the Stockholders setting forth the powers, preferences, etc., of the various classes of stock of the Company. ARTICLE XXIV Capital Stock The amount of capital stock shall be as fixed in the Charter of this Corporation or as the same may be increased or decreased from time to time in accordance with the provisions of law. ARTICLE XXV Certificates of Stock Every Stockholder shall be entitled to a certificate or certificates of stock of the Company in form prescribed by the Board of Directors, duly numbered and sealed with the corporate seal of the Company, and setting forth the number and kind of shares represented thereby to which each Stockholder is entitled. Such certificates shall be signed by the President or a Vice President and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary of the Company. The Board of Directors may also appoint one or more Transfer Agents and/or Registrars for its stock of any class or classes and may require stock certificates to be counter-signed and/or registered by one or more of such Transfer Agents and/or Registrars. If certificates of capital stock of the Company are signed by a Transfer Agent or by a Registrar, the signature of the officers of the Company and the seal of the Company thereon may be facsimiles, engraved, printed or otherwise reproduced. Any provisions of these Bylaws with reference to the signing and sealing of stock certificates shall include, in cases above permitted, such facsimiles. In case any officer or officers who shall have signed, or whose facsimile signature or signatures shall have been used on, any such certificate or certificates shall cease to be such officer or officers of the Company, whether because of death, resignation or otherwise, before such certificate or certificates shall have been delivered by the Company, such certificate or certificates may nevertheless be adopted by the Board of Directors of the Company and be issued and delivered as though the person or persons who signed such certificate or certificates or whose facsimile signature or signatures shall have been used thereon had not ceased to be such officer or officers of the Company. ARTICLE XXVI Transfer of Stock Shares of stock may be transferred by delivery of the certificate, accompanied either by an assignment in writing on the back of the certificate, or by a written power of attorney to sell, assign and transfer the same, signed by the owner of the certificate. No transfer shall affect the right of the Corporation to pay any dividend due upon the stock, or to treat the holder of record as the holder in fact until such transfer is recorded upon the books of the Corporation or a new certificate is issued to the person to whom it has been so transferred. It shall be the duty of every Stockholder to notify the Corporation of his post office address. ARTICLE XXVII Record Dates The Board of Directors or the Executive Committee may fix in advance (a) a date, not less than ten (10) nor more than forty-five (45) days preceding the date of any meeting of the Stockholders, as a record date for the determination of Stockholders entitled to notice of and to vote at any such meeting or any adjournment thereof; (b) a date, not less than ten (10) nor more than thirty (30) days prior to the date for the payment of any dividend, or other distribution, or the date for the allotment of rights, or the date when any change, conversion or exchange of capital stock (including any exchange of stock upon a merger, consolidation or sale of all, or substantially all, of the assets of the Corporation) shall go into effect, as a record date for the determination of the Stockholders entitled to receive payment of any such dividend, or distribution, or to any such allotment of rights, or to exercise the rights in respect of any change, conversion or exchange of capital stock, as the case may be; and (c) a date, not less than ten (10) nor more than forty-five (45) days preceding the date for the taking of any other lawful corporate action not covered by the foregoing, as a record date for the determination of Stockholders entitled to act thereon and/or receive the benefit thereof; notwithstanding, in any such case, any transfer of any stock on the books of the Corporation after any such record date fixed as aforesaid. ARTICLE XXVIII Loss of Certificates In case of the loss, mutilation or destruction of a certificate of stock, a duplicate certificate may be issued therefor upon such terms as the Board of Directors shall prescribe. ARTICLE XXIX Seal The seal of this Corporation shall consist of a flat faced circular die with the words and figures "Savannah Electric and Power Company Corporate Seal 1921 Georgia" cut or engraved thereon. ARTICLE XXX Facsimile Signatures on Bonds and Debentures The signatures of any officer of this Corporation executing a corporate bond, debenture or other debt security of the Corporation or attesting the corporate seal thereon, or upon any interest coupons annexed to any such corporate bond, debenture or other debt security of the Corporation, and the corporate seal affixed to any such bond, debenture or other debt security of the Corporation, may be facsimiles, engraved or printed, provided that such bond, debenture or other debt security of the Corporation is authenticated or countersigned with the manual signature of an authorized officer of the corporate trustee designated by the indenture or other agreement under which said security is issued or of an authenticating agent appointed by such corporate trustee to act in its behalf or by a transfer agent, or registered by a registrar, other than the Corporation itself or an employee of the Corporation. In case any officer or officers whose signature or signatures, whether manual or facsimile, shall have been used on any corporate bond, debenture or other debt security shall cease to be an officer or officers of the Corporation for any reason before the same has been delivered by the Corporation, such bond, debenture or other debt security may nevertheless be issued and delivered as though the person or persons whose signatures were used thereon had not ceased to be such officer or officers. ARTICLE XXXI Indemnification and Related Matters Each person who is or was a director or officer of the Corporation or is or was an employee of the Corporation holding one or more positions of management through and inclusive of department managers (but not positions below the level of department managers) (such positions being hereinafter referred to as "Management Positions") and who was or is a party or was or is threatened to be made a party to any threatened, pending or completed claim, action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was a director or officer of the Corporation or is or was an employee of the Corporation holding one or more Management Positions, or is or was serving at the request of the Corporation as a director, officer, employee, agent or trustee of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, shall be indemnified by the Corporation as a matter of right against any and all expenses (including attorneys' fees) actually and reasonably incurred by him and against any and all claims, judgments, fines, penalties, liabilities and amounts paid in settlement actually incurred by him in defense of such claim, action, suit or proceeding, including appeals, to the full extent permitted by applicable law. The indemnification provided by this Article shall inure to the benefit of the heirs, executors and administrators of such person. Expenses (including attorneys' fees) incurred by a director or officer of the Corporation or employee of the Corporation holding one or more Management Positions with respect to the defense of any such claim, action, suit or proceeding may be advanced by the Corporation prior to the final disposition of such claim, action, suit or proceeding, as authorized by the Board of Directors in the specific case, upon receipt of an undertaking by or on behalf of such person to repay such amount unless it shall ultimately be determined that such person is entitled to be indemnified by the Corporation under this Article or otherwise; provided, however, that the advancement of such expenses shall not be deemed to be indemnification unless and until it shall ultimately be determined that such person is entitled to be indemnified by the Corporation. The Corporation may purchase and maintain insurance at the expense of the Corporation on behalf of any person who is or was a director, officer, employee, or agent of the Corporation, or any person who is or was serving at the request of the Corporation as a director (or the equivalent), officer, employee, agent or trustee of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, against any liability or expense (including attorneys' fees) asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability or expense under this Article or otherwise. Without limiting the generality of the foregoing provisions, no present or future director or officer of the Corporation, or employee of the Corporation holding one or more Management Positions, or his heirs, executors, or administrators, shall be liable for any act, omission, step, or conduct taken or had in good faith, or for any undertaking entered into by the Corporation or its subsidiaries or affiliates which is required, authorized, or approved by any order or orders issued pursuant to the Public Utility Holding Company Act of 1935, the Federal Power Act, or any undertaking entered into by the Corporation due to environmental requirements including all legally enforceable environmental compliance obligations imposed by federal, state or local statute, regulation, permit, judicial or administrative decree, order and judgment or other similar means, or any undertaking entered into by the Corporation pursuant to any approved compliance plan, or any federal or state statute or municipal ordinance regulating the Corporation or its parent by reason of their being holding or investment companies, public utility companies, public utility holding companies, or subsidiaries of public utility holding companies. In any action, suit, or proceeding based on any act, omission, step, or conduct, as in this paragraph described, the provisions hereof shall be brought to the attention of the court. In the event that the foregoing provisions of this paragraph are found by the court not to constitute a valid defense on the grounds of not being applicable to the particular class of plaintiff, each such director and officer, or employee holding a Management Position, and his heirs, executors, and administrators, shall be reimbursed for, or indemnified against, all expenses and liabilities incurred by him or imposed on him, in connection with, or arising out of, any such action, suit, or proceeding based on any act, omission, step, or conduct taken or had in good faith as in this paragraph described. Such expenses and liabilities shall include, but shall not be limited to, judgments, court costs, and attorneys' fees. The foregoing rights shall not be exclusive of any other rights to which any such director or officer or employee may otherwise be entitled and shall be available whether or not the director or officer or employee continues to be a director or officer or employee at the time of incurring any such expenses and liabilities. If any word, clause or provision of the Bylaws or any indemnification made under this Article shall for any reason be determined to be invalid, the provisions of the Bylaws shall not otherwise be affected thereby but shall remain in full force and effect. The masculine pronoun, as used in the Bylaws, means the masculine and feminine wherever applicable. ARTICLE XXXII Amendments The By-laws of the Company may be altered, amended or repealed (a) at any meeting of the Board of Directors by the vote of a majority of the entire Board then in office, or (b) by the vote of the holders of a majority of that part of the capital stock of the Company having voting powers which is represented in person or by proxy at any annual meeting of stockholders or at any special meeting called for that purpose (provided that a lawful quorum of stockholders be there represented in person or by proxy), or (c) without a meeting by the written consent of the holders of all of the issued and outstanding capital stock of the Company having voting powers; provided, however, that the Board of Directors shall not have power to alter, amend or repeal the provisions of Article VII or Article XXXI of the By-laws and provided, further, that an alteration, amendment or repeal of any other provision of the By-laws by the Board of Directors shall cease to be effective unless submitted to and ratified or approved at the next annual or special meeting at which a lawful quorum of stockholders is represented in person or by proxy by the vote of the holders of a majority of that part of the capital stock of the Company having voting powers which is represented in person or by proxy at such meeting ### file: h:\BYLAWS AMENDED MAY 2000.doc EX-15.A 4 0004.txt ARTHUR ANDERSEN LLP EXHIBIT 15(a) ARTHUR ANDERSEN August 8, 2000 Alabama Power Company 600 North 18th Street Birmingham, Alabama 35291 Ladies and Gentlemen: We are aware that Alabama Power Company has incorporated by reference in Registration Statement 333-67453 its Form 10-Q for the quarter ended June 30, 2000 which includes our report on Alabama Power Company dated August 8, 2000 covering the unaudited interim financial information contained therein. Pursuant to Regulation C of the Securities Act of 1933 (the "Act"), such report is not considered a part of the Registration Statement prepared or certified by our firm or a report prepared or certified by our firm within the meaning of Sections 7 and 11 of the Act. Very truly yours, /s/ Arthur Andersen LLP EX-15.B 5 0005.txt ARTHUR ANDERSEN LLP EXHIBIT 15(b) ARTHUR ANDERSEN August 8, 2000 Georgia Power Company 241 Ralph McGill Boulevard, NE Atlanta, Georgia 30308 Ladies and Gentlemen: We are aware that Georgia Power Company has incorporated by reference in Registration Statement 333-75193 its Form 10-Q for the quarter ended June 30, 2000 which includes our report on Georgia Power Company dated August 8, 2000 covering the unaudited interim financial information contained therein. Pursuant to Regulation C of the Securities Act of 1933 (the "Act"), such report is not considered a part of the Registration Statement prepared or certified by our firm or a report prepared or certified by our firm within the meaning of Sections 7 and 11 of the Act. Very truly yours, /s/ Arthur Andersen LLP EX-27.A 6 0006.txt FINANCIAL DATA SCHEDULE SOUTHERN COMPANY
UT This schedule contains summary financial information extracted from the Form 10-Q for June 30, 2000, and is qualified in its entirety by reference to such financial statements. 0000092122 THE SOUTHERN COMPANY 1,000 6-MOS Dec-31-2000 Jun-30-2000 PER-BOOK 24,890,913 7,964,396 4,135,121 2,531,060 0 39,521,490 3,503,112 1,146,940 4,270,781 8,920,833 2,321,945 368,126 3,935,654 2,428,789 8,384,256 2,300,606 385,051 0 92,845 2,763 10,380,622 39,521,490 5,768,236 210,154 4,429,815 4,429,815 1,338,421 179,296 1,307,563 710,757 596,806 9,458 587,348 437,846 0 1,144,612 0.90 0.90
EX-27.B 7 0007.txt FINANCIAL DATA SCHEDULE ALABAMA POWER
UT This schedule contains summary financial information extracted from the Form 10-Q for June 30, 2000, and is qualified in its entirety by reference to such financial statements. 0000003153 ALABAMA POWER COMPANY 1,000 6-MOS Dec-31-2000 Jun-30-2000 PER-BOOK 7,885,649 343,859 971,460 788,219 0 9,989,187 224,358 1,623,091 1,187,160 3,034,609 347,000 317,512 987,905 24,000 2,446,257 196,242 0 0 3,744 854 2,631,064 9,989,187 1,646,635 100,919 1,246,198 1,246,198 400,437 14,785 314,303 135,612 178,691 8,004 170,687 208,800 0 285,992 0 0
EX-27.C 8 0008.txt FINANCIAL DATA SCHEDULE GEORGIA POWER
UT This schedule contains summary financial information extracted from the Form 10-Q for June 30, 2000, and is qualified in its entirety by reference to such financial statements. 0000041091 GEORGIA POWER COMPANY 1,000 6-MOS Dec-31-2000 Jun-30-2000 PER-BOOK 9,962,042 470,984 1,109,842 1,108,094 0 12,650,962 344,250 2,085,023 1,745,069 4,174,342 789,250 14,569 2,013,428 0 895,000 398,159 50,000 0 84,378 1,240 4,230,596 12,650,962 2,212,316 160,084 1,678,443 1,678,443 533,873 (1,555) 372,234 129,663 242,571 339 242,232 275,100 0 634,115 0 0
EX-27.D 9 0009.txt FINANCIAL DATA SCHEDULE GULF POWER
UT This schedule contains summary financial information extracted from the Form 10-Q for June 30, 2000, and is qualified in its entirety by reference to such financial statements. 0000044545 GULF POWER COMPANY 1,000 6-MOS Dec-31-2000 Jun-30-2000 PER-BOOK 1,081,092 4,475 149,524 74,719 0 1,309,810 38,060 221,266 151,067 410,393 85,000 4,236 247,722 58,000 119,002 0 0 0 0 0 385,457 1,309,810 320,618 10,449 274,106 274,106 46,512 (711) 35,352 17,664 17,688 108 17,580 29,500 0 70,396 0 0
EX-27.E 10 0010.txt FINANCIAL DATA SCHEDULE MISSISSIPPI POWER
UT This schedule contains summary financial information extracted from the Form 10-Q for June 30, 2000, and is qualified in its entirety by reference to such financial statements. 0000066904 MISSISSIPPI POWER COMPANY 1,000 6-MOS Dec-31-2000 Jun-30-2000 PER-BOOK 1,064,254 2,280 163,082 41,677 0 1,271,293 37,691 191,828 164,003 393,522 35,000 31,809 182,295 47,000 188,883 0 30,020 0 0 0 362,764 1,271,293 310,733 11,852 264,010 264,010 46,723 931 35,802 15,841 19,961 1,007 18,954 27,400 0 44,899 0 0
EX-27.F 11 0011.txt FINANCIAL DATA SCHEDULE SAVANNAH ELECTRIC
UT This schedule contains summary financial information extracted from the Form 10-Q for June 30, 2000, and is qualified in its entirety by reference to such financial statements. 0000086940 SAVANNAH ELECTRIC AND POWER COMPANY 1,000 6-MOS Dec-31-2000 Jun-30-2000 PER-BOOK 452,394 2,003 81,580 44,111 0 580,088 54,223 9,788 106,466 170,477 40,000 0 82,155 41,700 30,000 0 30,000 0 4,723 669 180,364 580,088 125,170 4,858 104,487 104,487 20,683 (325) 15,500 7,570 7,930 0 7,930 12,300 0 20,083 0 0
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